Oil futures were flat to slightly lower in early trade Wednesday, steadying after a selloff the previous session that analysts blamed in part on Federal Reserve Chair Jerome Powell’s remarks on the U.S. interest rate outlook.
Investors were also awaiting an official take on U.S. crude inventories after data from an industry trade group showed a decline.
Price action
-
West Texas Intermediate crude for April delivery
CL.1,
-0.58% CLJ23,
-0.58%
fell 25 cents, or 0.3%, to $77.33 a barrel on the New York Mercantile Exchange. -
May Brent crude
BRN00,
-0.36% BRNK23,
-0.36% ,
the global benchmark, was off 9 cents, or 0.1%, at $83.20 a barrel on ICE Futures Europe. -
Back on Nymex, April gasoline
RBJ23,
-0.76%
fell 0.6% to $2.685 a gallon, while April heating oil
HOJ23,
-0.36%
was down 0.4% at $2.785 a gallon. -
April natural gas
NGJ23,
-2.53%
lost 06% to $2.685 per million British thermal units.
Market drivers
Powell, in testimony before the Senate Banking Committee, warned Tuesday that interest rates would need to rise higher than previously thought to get inflation under control and opened the door to larger interest rate increases in coming meetings than previously expected. Powell will testify before a House committee on Wednesday.
See: Powell leaves door open for faster pace of interest rate rises at March meeting
Powell’s remarks sent shivers through financial markets. Short-term Treasury yields surged, lifting the U.S. dollar, while stocks fell sharply as traders continued to reassess the interest rate outlook and the potential for aggressive Fed monetary tightening to trigger a recession.
“WTI futures printed an ‘outside reversal’ on the daily chart characterized by a new recent high followed by a daily close below the previous day’s low tick. Technically that suggests yesterday’s high could mark a near-term peak in oil prices, which would leave the market still rangebound between support near $73 and resistance
near $82/barrel,” wrote analysts at Sevens Report Research in a Wednesday note.
Inventory data
The American Petroleum Institute late Tuesday reported a 3.8 million barrel decline in U.S. crude inventories last week, according to a source citing the data. Gasoline inventories were seen up 1.8 million barrels and distillates up 1.9 million barrels, the source said.
Official data from the Energy Information Administration is due Wednesday morning. Analysts surveyed by The Wall Street Journal, on average, looked for crude inventories to show a rise of 700,000 barrels, while gasoline stocks were seen down 1.4 million barrels and distillates down 1 million barrels.
