Oil prices increased on Wednesday ahead of the US Federal Reserve’s two-day meeting for the interest rate hike in order to tame record-high inflation.
International benchmark Brent crude was trading at $121.35 per barrel at 0701 GMT for a 0.14% increase after closing the previous session at $121.17 a barrel.
American benchmark West Texas Intermediate (WTI) was at $119.06 per barrel at the same time for a 0.10% gain after the previous session closed at $118.93 a barrel.
The US central bankers began their two-day policy meeting on Tuesday, amid an aggressive inflation spike that has fueled speculation that the Federal Reserve will approve the largest interest rate raise in more than 27 years.
After raising interest rates by 25 and 50 basis points in March and May, respectively, the Fed is widely expected to deliver a 75 basis point rate hike.
Although experts say the markets have already priced 75 basis point of interest rate hike, the Fed has different options to follow, forcing investors to be cautious.
The prospect of the Fed taking a much more hawkish stance reinforces concerns about the oil demand.
Blunting the price momentum, the American Petroleum Institute (API) announced its estimate of over a 736,000 barrel increase in US crude oil inventories late Tuesday, relative to the market expectation of a decrease of 1.2 million barrels.
The predicted increase in stockpiles signals a drop in crude demand in the US, the world’s top oil consumer.
Meanwhile, fears over COVID-19 in Beijing hindered the projected demand recovery in China, and these concerns were exacerbated by Shanghai’s temporary lockdown steps for coronavirus mass testing on June 11.
Chinese authorities announced major testing in Chaoyang, Beijing, from June 12 to June 15, as the country presses down on the “dynamic zero-COVID policy.”
Source: Anadolu Agency
