Brent crude futures rose at the settlement by $1.43, or 1.7 percent, to $85.61 a barrel, while West Texas Intermediate crude futures rose $1.79, or 2.2 percent, to $81.53 a barrel.
Investors are more optimistic that the Federal Reserve is close to ending its cycle of interest rate hikes, making oil denominated in the greenback cheaper for buyers holding other currencies.
New York Fed President John Williams said on Tuesday that the prospect of the Fed raising interest rates again by 25 basis points is a good starting point, adding that the central bank’s policy path will depend on upcoming data.
The US inflation report, which will be released on Wednesday, is expected to help investors anticipate the path of interest rates in the near term.
“The outlook for crude oil demand in the short term will soon be clearer,” said Edward Moya, senior analyst at OANDA, told Reuters.
Data from China showed that consumer price inflation rose in March at the slowest pace since September 2021, indicating continued weak demand in the country.
“China’s consumer price index for March is lower than expected, which may encourage the Chinese government to further stimulate the economy,” said Tina Ting, an analyst at CMC Markets.
Oil futures have risen about seven percent since the OPEC + group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, announced last week a new round of production cuts starting in May, surprising the markets.
The US Energy Information Administration said in its short-term energy outlook report on Tuesday that OPEC production is expected to decrease by 500,000 barrels per day in 2023, and then rise by one million barrels per day in 2024 after the group’s production agreement expires.
The administration expected that the total production of non-OPEC liquid fuels will grow by 1.9 million barrels per day in 2023 and by one million barrels per day in 2024.
In France, restarting the last of the four domestic refineries closed due to a month-long strike could potentially boost oil demand.
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