Oil prices gaining ground as markets eye US Fed meeting, data from China

By Ebru Sengul Cevrioglu

IZMIR (AA) - Oil prices recovered slightly on Wednesday due to investor caution ahead of the Federal Reserve's next interest rate decision and economic data from China.

International benchmark Brent crude traded at $74.61 per barrel at 9.59 a.m. local time (0659 GMT), a 0.43% rise from the closing price of $74.29 a barrel in the previous trading session on Tuesday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $69.62 per barrel, up 0.29% from the previous session's close of $69.42 per barrel.

After increasing interest rates by a total of 500 basis points since March 2022 in ten meetings to lower record-high inflation, the Fed is widely expected to put a stop to rate hikes at the conclusion of its two-day meeting on Wednesday.

The Bank of Canada and the European Central Bank are expected to raise interest rates to combat inflation, but the Bank of Japan is predicted to maintain its ultra-easy policy on Friday.

The People's Bank of China unexpectedly cut a key short-term policy rate on Tuesday for the first time in ten months to aid the country's struggling post-COVID recovery.

Investors are also focused on other significant data from the world's largest crude importer, such as industrial production, retail sales and the May housing price index, which will be released on Thursday.

Meanwhile, the American Petroleum Institute (API) announced an estimated increase of 1.02 million barrels in US crude oil inventories, contrary to the market expectation of a 1.3 million-barrel fall.

A strong inventory increase implies a lowering in crude demand in the US, fueling market worries over declining demand.

The US Energy Information Administration's (EIA) data on oil stocks will be announced later on Wednesday, and if the increase in stock levels is confirmed, prices are expected to decline.