Despite the United States Federal Reserve raising interest rates for the fourth time this year, Brent crude gained 1.6% or $1.51 per barrel on Wednesday to $96.16 per barrel.
Even as stocks fell and the dollar rose, the oil market maintained its rally after Federal Reserve Chair Jerome Powell said it was premature to consider pausing rate hikes. This had no negative impact on the market, as West Texas Intermediate (WTI) crude rose 1.8%, or $1.63, to $90.00 per barrel.
The US Federal Reserve raised interest rates by 75 basis points yesterday to reduce consumer inflation, which has reached a four-decade high, though future increases may be in smaller increments.
The policy decision set the target federal funds rate at 3.75 percent to 4 percent, the highest level since early 2008.
Mr Powell stated that a change in pace could occur as soon as the central bank’s next meeting in December. However, he also warned that there is still considerable uncertainty about how high rates will need to go. They may be higher than policymakers predicted at their last meeting in September.
Another drop in US oil inventories boosted the market as refineries ramped up activity ahead of the winter heating season.
The Energy Information Administration (EIA) reported a 3.1 million barrel inventory draw for the week ending October 28.
The EIA also reported that inventories were 3% lower than the five-year average for this time of year, at 436.8 million barrels. It had estimated a 2.6 million barrel inventory build a week earlier.
According to unverified social media reports, oil has been rising this week due to a weaker dollar and hopes that China will soon amend its zero-Covid policy.
The European Union’s oil embargo against Russia is set to begin on December 5. The ban, imposed in response to Russia’s invasion of Ukraine, will be followed by a freeze on oil imports in February. It is expected to limit Russia’s ability to ship crude products worldwide, potentially tightening the market.
Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) output fell in October for the first time since June, pumping 1.36 million barrels per day less than its target.
