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Oil Up For 3rd Day In a Row As Fed Proves Less Hawkish

Brent crude is up 1.55% today, rising for the third day in a row following Federal Reserve Chairman Jerome Powell’s unexpectedly less hawkish statement on Tuesday, which appears to have given risk appetites a bit of a boost.

While Brent was trading at $84.99 per barrel on Wednesday at 2:30 p.m. EST, with WTI up 1.58% at $78.36, sentiment is that with a weakening U.S. dollar, dollar-dominated oil will be cheaper for buyers with other currencies.

On Tuesday, Powell said he saw indications that inflation is cooling. That statement came just days after the Fed raised its benchmark interest rate a quarter percentage point to 4.5%-4.75%

Powell, however, also noted that if the U.S. job market continued to strengthen or if inflation readings accelerated, the Fed may have to raise its benchmark interest rate higher than projected. Last week, new data showed 517,000 jobs were added in January–a doubling over December, with employment falling to 3.4%, the lowest level in over half a century. 

Also boosting oil prices is the growing consensus that China’s rebound will be solid, while Russian supply losses add to further bullishness. China’s oil consumption is expected to account for half of this year’s global oil demand growth of 1.9 million barrels per day, according to the International Energy Agency (IEA). Particularly, the IEA sees significantly improved demand for jet fuel and diesel, presenting upticks in travel and industrial activity.

The National Bank of Kuwait said in a Wednesday report that it expects oil prices to average $91 per barrel this year, despite having traded sideways so far. 

The IEA expects global oil demand to hit 101.7 million barrels per day this year, which includes a drop of 0.8 million bpd for Q1 2032 (quarter on quarter) in oil demand. 

By Charles Kennedy for Oilprice.com

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  • George Doolittle on February 08 2023 said:
    Oil traders continue to amaze keeping prices elevated despite the worst macro environment for oil and distillate fuels arguably since before World War 2 1939-1945. Whether this be a result of hedging or not would be interesting to report on I think as was massive commercial players such as a major Airliner may or may not be doing would be a great insight into the remarkable World of oil and High Finance and Banking here in both the Media Capital and now Energy Capital of the World, USA. Remarkable images by "Bear's Workshop"* on YouTube as relates to Lucid Motors in i think Casa Grande Arizona maybe? US Federal Reserve Board has been absolutely amazing 2022-2023 now all can see as well in at least containing the effects of a broad based reopening from *"Lockdowns"* without any real effort on the part of our US Federal Government to determine... was there ever a crisis in the first place? I'm suddenly now unclear about that.

    Is the crisis "now!" and "World Warm 3!" I'm now more unclear about that more than ever as well. Great reporting here going on forever now as I still think the correct cash price for one barrel of oil be $1.00 US Dollar a barrel only been proven wrong going on or about 80 plus Years on that call now tho i must admit.

    For a brief time oil futures prices did go negative tho so I think that deserves to be pointed out in my defense and just...was it only 2 Years ago when none of us had problems getting our mail and issues as relates to crazy telecom people? Long $kmi strong buy. Very impressive start to Year 2023 by Kathy Wood and Ark Investing.

    Spectacular start for that Team in point of fact.

    Very impressive numbers by Uber as well.
    Apparently a solid day for US Treasuries today too.

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