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Oil prices settle higher as investors await further clues on demand

Published 02/20/2024, 08:41 PM
Updated 02/21/2024, 03:29 PM
© Reuters. Oil prices settled higher Wednesday as investors awaited further catalysts including a flurry of economic data and an update on U.S. crude inventories due later this week after the Federal Reserve's minutes from its January meeting reinforced expectations for higher for longer rates.

At 14:30 ET (19:30 GMT), the West Texas Intermediate crude futures gained 1.1% to settle at $77.91 a barrel, while Brent oil futures rose 0.8% to $82.91 a barrel. 

Fed minutes suggest peak rates, but no cuts too soon; PMI data up next

Federal Reserve policymakers suggested that interest rates have reached a peak, though stopped short of signaling any urgency to pivot to rate cuts as concerns of "upside risks" to inflation begin to emerge, according to the minutes of the Federal Reserve’s Jan.30-31 meeting released Wednesday.

The outlook on rate cuts, which would help support hopes for ongoing global growth and crude demand, appear murky at best as the minutes also flagged that voting members expressed "uncertainty associated with how long a restrictive monetary policy stance would need to be maintained." 

Market focus remains on a string of upcoming economic cues from the U.S., eurozone and Japan, due later this week, for more signals on the world’s largest economies.

Further macroeconomic data that could provide updates on global growth is on the calendar later this week includhing purchasing managers index data for February from several major economies, due on Thursday.

Fresh crude inventory data eyed

Following the Energy Information Administration's report last week of a much larger build in U.S. crude stockpiles, investors will look to the American Petroleum Institute's petroleum data due later on Wednesday for further insight into domestic supplies.

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The report will arrive ahead of the U.S. inventory data due Thursday.

Middle East tensions persist

Oersistent concerns over the ongoing conflict in the Middle East including the attack in the Red Sea continue to threaten global supplies, keeping the supply-risk premium in oil prices. 

The U.S. vetoed a United Nations resolution calling for an immediate ceasefire in Gaza, pointing to little signs of deescalation in the Israel-Hamas war. The veto was Washington's third such move in recent months. 

A string of attacks on vessels in the Red Sea by the Yemeni Houthis also pointed to continued disruptions in shipping activity through the region, which are expected to potentially delay some oil deliveries in Asia and Europe. 

(Peter Nurse, Ambar Warrick contributed to this article.)

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