(London) Crude prices edged higher on Wednesday, buoyed by early weekly data on U.S. crude inventories showing a decline, but also by prospects of a U.S. rate cut.
At around 5:40 a.m. (Eastern time) (11:40 a.m. in Paris), the price of a barrel of North Sea Brent crude for delivery in September rose 0.20% to $84.83.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in August, rose by 0.29% to 81.65 dollars.
On Tuesday, the API, the American industry association, reported a decline in commercial crude inventories of about 1.92 million barrels last week, and of 2.95 million barrels for gasoline.
The U.S. Energy Information Administration’s weekly oil inventory report for the week ended July 5 is due later Wednesday. Analysts expect crude inventories to rise and gasoline inventories to fall.
If the EIA figures confirm those of the API, crude prices could come out of “the trough” and rise even higher, says Tamas Varga, an analyst at PVM Energy.
Investors are also keeping an eye on Storm Beryl, downgraded to a post-tropical cyclone, which is now crossing the United States towards the northeast and heading towards New England and Canada on Wednesday.
After crossing the Caribbean as a hurricane, Beryl hit the southern United States on Monday, causing several deaths in Texas and Louisiana, authorities announced.
“Depending on the path of the storm, it could impact crude oil or products, which would cause fluctuations” in prices, Varga said.
Meanwhile, Federal Reserve Chairman Jerome Powell on Tuesday praised the “progress” made in recent months in the fight against inflation during a hearing before a Senate committee. He stressed that “recent inflation data show further, modest progress” in the right direction.
Analysts and market watchers are increasingly expecting the Fed to cut interest rates at its September policy meeting.
Lower interest rates are favorable to oil purchases while a high rate environment tends to slow economic growth, and therefore demand for crude.
Rate cuts also tend to weigh on the greenback. And since oil prices are denominated in dollars, a depreciation of the American currency pushes demand for oil on the markets by increasing the purchasing power of investors using foreign currencies.
Investors are also awaiting the publication on Thursday of the consumer price index (CPI) in the United States for June, which will provide information on the trajectory of inflation.