Oil Pares Gains After US Crude, Gasoline Inventories Increase - Yahoo Finance

Oil Rises Ahead of Crude Inventory Report as US Inflation Cools

(Bloomberg) -- Oil extended gains above $79 after industry data pointed to shrinking US crude stockpiles, while inflation in the world’s largest economy slowed more than expected.

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Crude rallied on the back of broader risk-on sentiment after US consumer prices came in cooler than anticipated, which could represent the early stages of inflation resuming a downward trend. Later this afternoon, the Federal Reserve will release its interest rate decision, but officials can still adjust their quarterly economic projections depending on what the CPI data show.

West Texas Intermediate rose as much as 1.8%, with prices having regained all the ground they lost after OPEC+’s decision earlier this month to gradually unwind some output cuts. Wednesday’s advance was aided by a report from the American Petroleum Institute that US crude inventories dropped by 2.4 million barrels last week. Official figures from the US Energy Information Administration are due later Wednesday.

Prices have rallied from last week’s post-OPEC+ selloff, a sign that the biggest pullback in speculative bullish bets on record is at least partially reversing. Goldman Sachs Group Inc. said earlier this week that financial demand for oil contracts still had a lot of room to recover.

Oil traders have been wrestling with bumpy price moves recently as a weak market for real-world barrels vies with hopes that consumption will improve over the summer. The US on Tuesday forecast its production in 2024 will increase more than previously estimated to a fresh record, while the International Energy Agency is warning of a lasting oil surplus for the rest of this decade.

“This week’s big recovery has weakened the bears’ hold on the market, although more price action is needed to confirm a bottom,” said Fawad Razaqzada, a market analyst at City Index and Forex.com. “But it is possible we could see crude oil prices come under pressure again after the recent recovery. The lower highs suggest the short-term path of least resistance is still downward, until told otherwise by the charts.”

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