Oil recovered after its first drop this week as attention turned from expanding American fuel stockpiles to the prospects for monetary easing as the world’s top central bankers gather in Jackson Hole, Wyoming.
Futures added 1.2% to trade above $56 a barrel in New York. Investors anticipate another rate cut at the Federal Reserve’s Sept. 17-18 meeting and will be closely watching Chair Jerome Powell’s speech Friday at the annual policy retreat. Prices declined on Wednesday, spurred by a surprise jump in U.S. diesel and gasoline inventories.
Oil is heading for its first back-to-back weekly gain since June, aided by a drone attack on a Saudi Arabian oil field and hints of a thaw in U.S.-China trade relations. Crude inventories fell by 2.7 million barrels last week, the first drop in three weeks, the U.S. Energy Information Administration said Wednesday.
“Oil is slowly ticking higher, but I have a sense of it lacking conviction,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “We are in a wait-and-see mode ahead of Friday’s speech by Powell, given its impact on risk appetite. That’s something oil traders are focusing on more than fundamentals at this stage.”
West Texas Intermediate crude for October delivery rose 59 cents to $56.27 a barrel on the New York Mercantile Exchange as of 8:52 a.m. local time. The contract has gained 2.6% so far this week.
Brent for October settlement advanced 44 cents to $60.74 a barrel on the ICE Futures Europe Exchange. The global benchmark traded at a premium of $4.44 to WTI.
The drop in U.S. crude inventories last week was overshadowed by a 2.61 million-barrel increase in stored supplies of diesel and other distillates. That’s heightening demand concerns, particularly as it’s still the U.S. summer driving season. Stocks of these products were forecast to decline by 300,000 barrels in a Bloomberg survey.
Investors are now pinning hopes on central banks to revive demand. Powell’s speech will be parsed for indications on whether to expect a longer easing cycle for U.S. interest rates.
© 2019 Bloomberg L.P.