Oil prices rose on Wednesday, on an increased oil demand outlook and WTI price climbed to $77.7 per barrel. If the WTI price declines, it may encounter support near $70.2 per barrel, while resistance may be found near $81.4 per barrel.
Hopes of global economic recovery boosted oil prices on Wednesday. US inflation data are scheduled to be released on Thursday and are this week’s most highly anticipated fundamentals, as they may influence the Federal Reserve’s monetary policy. Aggressive rate hikes stifle economic activity fuelling recession fears. Several major Central Banks, such as the US Federal Reserve, the ECB, and the BOE raised interest rates significantly over the past year, reducing the oil demand outlook. As inflation starts to cool though, central banks are starting to lower the pace of rate hikes, raising oil demand expectations.
Increased optimism about China’s economic reopening is also providing support for oil prices. China opened its borders this week, fuelling hopes that the country is gradually ending its strict Covid policy. China is the world’s largest energy importer and prolonged lockdowns have dampened oil demand. The Chinese government eased some of its strident Covid regulations recently, abandoning its zero-Covid policy. China’s economy, however, has suffered from prolonged lockdowns and the country’s debt has ballooned over the past few years. China’s weak economy is raising concerns over the demand outlook for oil, pushing prices down.
On the other hand, US Crude Oil inventories rose unexpectedly on Wednesday. According to the US Energy Information Administration, an inventory build of 19 million barrels was reported, putting pressure on oil prices.
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