Oil steady as US data cools inflation worries

By Sibel Morrow

ANKARA (AA) - Oil prices were little changed on Wednesday, rebounding from the previous session's lows over signs of easing inflation in the US, the world's largest oil-consuming country, while the market continues to be over-cautious ahead of OPEC+ and US Federal Reserve (Fed) meetings.

International benchmark Brent crude traded at $85.52 per barrel at 10.12 a.m. local time (0712GMT), up 0.07% from the closing price of $85.46 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $79.03 per barrel at the same time, a 0.20% gain after the previous session closed at $78.87 a barrel.

Prices rose slightly as the Fed's preferred inflation indicator eased annually to a 4.4% gain in December 2022, down from a 4.7% increase in November, according to US Commerce Department figures released last week.

The softening in the year-on-year figures is a result of the Fed's aggressive monetary tightening cycle and interest rate increases last year.

The US central bank last year made a total of 425 points rate hikes on seven occasions to fight record-high inflation that climbed to its highest level in over 40 years by mid-2022.

The Fed's first 2023 two-day meeting will conclude on Wednesday and is widely expected to result in a 25-basis-point rate hike.

- Negative economic predictions of IMF loom on prices

The markets also focused on an OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting set for Wednesday.

Price increases were capped after gloomy economic expectations from the International Monetary Fund.

The IMF has revised up its outlook for the global economy in 2023 but still expects a slowdown this year before a rebound in 2024.

According to an IMF report released late Monday, the world gross domestic product growth rates will remain weak due to the ongoing Russia-Ukraine war and high inflation.

The world economy is expected to grow 2.9% in 2023, upgraded from 2.7% in the IMF’s October report, but down from a 3.4% expansion for 2022.

Estimates of a massive rise in the US crude oil stockpiles also pressed down on prices.

Late Tuesday, the American Petroleum Institute (API) announced its estimate of a rise of nearly 6.3 million barrels in US crude oil inventories relative to the market expectation of a 1 million barrel fall.

Leading to investor caution, the new projected massive increase in crude stocks signaled falling crude demand in the US, the world's largest oil consumer, and weighed on oil prices.