Oil prices climb 2%, marking first increase in five days

WEB DESK: In a noteworthy development, oil prices experienced a 2 per cent climb on Wednesday, propelled by a smaller-than-expected build in US crude inventories.

This surge was further fueled by a substantial withdrawal from distillate and gasoline stockpiles.

Additionally, comments from the Federal Reserve chief, expressing anticipation of US interest rate cuts later this year, contributed to the positive market sentiment.

Lower interest rates, if realized, are poised to stimulate economic growth, potentially increasing the demand for oil.

Brent futures exhibited a robust performance, rising by $1.65, or 2.0 per cent, reaching $83.69 per barrel by 10:44 a.m. EST (1544 GMT).

Simultaneously, US West Texas Intermediate (WTI) crude demonstrated a 2.7 per cent increase, climbing by $2.07 to $80.22.

This surge marked a positive turn for Brent, positioning it for its first daily rise in five days.

The US Energy Information Administration (EIA) reported that energy firms added a smaller-than-anticipated 1.4 million barrels of crude into stockpiles during the week ending March 1.

In a surprising twist, distillate and gasoline inventories experienced more significant declines than initially projected.

Comparatively, the 1.4 million barrel increase in crude stocks contrasts with the 2.1-million barrel build predicted by analysts in a Reuters poll and the 0.4-million barrel build reported by the American Petroleum Institute (API), an industry group.

Federal Reserve Chair Jerome Powell, in remarks prepared for Congress, affirmed the central bank’s anticipation of reducing its benchmark interest rate later this year.

However, Powell emphasized the necessity for policymakers to gain “greater confidence” in the sustained decline of inflation.

Investors interpreted signs of a potential Fed cut as positive for both the economy and oil demand.

Notably, recent data revealed that US private payrolls slightly increased less than expected in February, strengthening the case for imminent rate cuts.

Looking ahead, Friday’s release of US non-farm payrolls data is anticipated to show a growth of 200,000 jobs in February, following a remarkable surge of 353,000 in January, according to a Reuters survey of economists.