Oil was steady in trade on Wednesday morning, paring two straight days of gains after an industry report showed U.S. crude inventories rose unexpectedly last week in a sign fuel demand may be weakening.
U.S. West Texas Intermediate (WTI) crude futures slightly rose 26 cents, or 0.37%, at $69.72.
Brent futures, which have risen more than 3% this week, rose 39 cents, or 0.52%, at $75.42 a barrel.
Data from the American Petroleum Institute on Tuesday showed U.S. crude inventories rose by about 3.3 million barrels in the week ended March 17, sources said.
That defied expectations for a drawdown of about 1.6 million barrels from eight analysts polled by Reuters.
Traders and analysts will be looking out for data from the U.S. Energy Information Administration on Wednesday to see whether it confirms signs of weaker crude demand.
At the same time, markets are awaiting the outcome of the U.S. Federal Reserve’s meeting on Wednesday, in what is widely seen as the most challenging Fed policy decision in recent times.
Following the meeting, Chair Jerome Powell is expected to unveil new economic projections and the central bank’s path for interest rate hikes.
While the market expects the Fed to raise rates by 25 basis points on Wednesday, some top central bank watchers say it could well pause further rate hikes or delay releasing new economic projections due to ructions in the global banking sector.
A pause in rate hikes would help stoke economic activity and in turn boost fuel demand.
Oil prices posted their biggest declines in months last week, after high-profile U.S. bank failures beginning March 10 and a crisis at Europe’s Credit Suisse. An emergency rescue of Credit Suisse over the weekend helped revive oil prices.
OPEC+ officials, hedge fund managers and oil market participants have called the recent decline in oil prices speculative and insisted that increasing demand will push prices to higher levels in the coming months.
ANZ analysts said top traders see fundamental oil issues driving prices higher.
“There are concerns that supply may also get hit more than demand amid the banking crisis. U.S. shale output is most at risk from tighter credit conditions from regional U.S. banks,” ANZ analysts said in a client note.
