Oil prices rose in early Asian trading on Wednesday, ahead of major global central bank meetings this week, including the US Federal Reserve, while the market closely monitors developments in the conflict in Gaza between Israel and Hamas.
Price action
By 0330 GMT, Brent crude futures for January delivery rose by 0.3 percent, or 28 cents, to $85.30 per barrel, after falling more than one percent in Tuesday’s session. Brent crude futures for December fell by four cents to settle at $87.41 per barrel with the expiration of the contract yesterday, Tuesday.
US West Texas Intermediate crude futures increased 0.2 percent, or 16 cents, to $81.02 per barrel, after losing about 1.6 percent in the previous session.
Edward Moya, chief market analyst at OANDA, said crude prices stabilize ahead of...the interest rate decision of the Federal Open Market Committee, which is the committee that determines the direction of US monetary policy.
He added that geopolitical risks remain and this appears to offset some of the impact of record production levels coming from the United States.
The American Petroleum Institute reported on Tuesday that crude oil stocks in the United States rose by about 1.3 million barrels last week, while fuel stocks fell by about 360,000 barrels, and distillate stocks fell by about 2.5 million barrels.
Raising interest rates to curb inflation could slow economic growth and reduce demand for oil, while lowering interest rates to stimulate spending could lead to increased oil consumption.
According to a poll conducted by the CME FeedWatch tool, the US Central Bank, which will conclude its meeting on Wednesday, is expected to keep interest rates steady.
In Europe, inflation in the euro zone in October reached the lowest level in two years, falling to 2.9 percent from 4.3 percent in September, according to a preliminary reading of the European Union Statistics Office (Eurostat), which led to expectations that the European Central Bank would not raise interest rates soon. The Bank of England will meet tomorrow, Thursday.
A special survey on Wednesday showed that factory activity in China unexpectedly contracted in October, after pessimistic official figures issued the previous day, raising questions about the fragile economic recovery at the beginning of the fourth quarter. China is the world's largest oil importer.
Regarding the escalation of the conflict in Gaza, US Secretary of State Anthony Blinken, who will visit Israel on Friday, said that the United States and other countries are examining a variety of possible alternatives for the future of the Gaza Strip if the Hamas movement is isolated from the Strip.
