Oil prices mixed over US crude stock drop, Fed rate hike signs

By Sibel Morrow

ANKARA (AA) - Oil prices were mixed on Wednesday, with US data indicating resurgent demand in the country, but continued concerns about Federal Reserve (Fed) interest rate hikes limited further price upticks.

International benchmark Brent crude traded at $83.39 per barrel at 09.38 a.m. local time (0638 GMT), up 0.12% from the closing price of $83.29 a barrel in the previous trading session.

At the same time, American benchmark West Texas Intermediate (WTI) traded at $77.56 per barrel, a 0.03% decrease after the previous session closed at $77.58 a barrel.

An estimated decline in US crude stockpiles supported higher prices.

The American Petroleum Institute (API) announced late Tuesday its estimate of a drop of nearly 3.8 million barrels in US crude oil inventories, relative to the market expectation of a 308,000-barrel increase.

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.

Meanwhile, price increases were fueled by US Fed Chair Jerome Powell's comments that rate hikes are "likely to be higher" than previously anticipated.

"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," he said at the US Senate’s Committee on Banking, Housing, and Urban Affairs.

"Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time," Powell added.

He said the latest economic data, referring to the PCE price index, was stronger than expected and suggested the ultimate level of interest rates, known as the terminal rate, is likely to be higher than previously anticipated.