Oil edged lower after a four-day rally of almost 6% as traders awaited Wednesday’s US interest-rate decision and guidance as to whether there’ll be further increases this year.
(Bloomberg) — Oil edged lower after a four-day rally of almost 6% as traders awaited Wednesday’s US interest-rate decision and guidance as to whether there’ll be further increases this year.
West Texas Intermediate traded near $79 a barrel, slipping from its highest close since mid-April. The gains have been fueled by signs that the global market is starting to tighten, and moves by China’s leadership to revive growth in the world’s largest crude importer after its recovery faltered.
The Federal Reserve is expected to raise borrowing costs to the highest level in 22 years later Wednesday, while retaining a tightening bias that signals the possibility of another move upward later this year. Higher rates risk slowing the economy and hurting energy consumption.
Crude has pushed higher in July as supply cuts from OPEC+ heavyweights Saudi Arabia and Russia take hold. Markets may already be facing a deficit, according to Giovanni Staunovo, a commodities analyst at UBS Group AG.
On Tuesday, the industry-funded American Petroleum Institute reported a mixed picture on crude inventories, flagging a weekly increase of 1.3 million barrels at the national level but a drop of 2.3 million at the key storage hub of Cushing, Oklahoma. Official government figures are due later Wednesday.
“The latest US inventory data was uninspiring” as traders were looking for signs of broader tightness in the market, Staunovo said. “A Fed hike is fully priced in, and traders will be looking more to the guidance” on potential future rate increases, he said.
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