Oil prices steadied in Asian trade on Wednesday, cooling after strong gains in the prior session as focus turned to a potential build in U.S. inventories, as well as an upcoming interest rate decision.
Crude prices rose sharply earlier this week as the U.S. threatened to sanction major buyers of Russian oil, to pressure Moscow into ending its conflict with Ukraine. Signs of progress in U.S. trade relations, after a deal was struck with the European Union, also aided oil markets.
But oil’s momentum was sapped by industry data showing an unexpected build in U.S. inventories. Caution before a Federal Reserve rate decision on Wednesday also weighed, as did anticipation of a barrage of other economic signals this week.
Brent oil futures for September rose 0.2% to $72.68 a barrel, while West Texas Intermediate crude futures rose 0.1% to $69.28 a barrel by 20:53 ET (00:53 GMT).
US inventories unexpectedly rise- API
Data from the American Petroleum Institute, released on Tuesday evening, showed U.S. oil inventories grew about 1.5 million barrels (mb) in the week to July 25.
This build contrasted expectations for a 2.5 mb draw, and also marked a reversal from a small draw in the prior week.
The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday. Signs of a build in U.S. inventories raise some questions about demand in the world’s biggest fuel consumer, especially amid heightened economic uncertainty.
A slew of key U.S. economic indicators are due this week, with the Fed set to conclude a two-day meeting later on Wednesday. The central bank is widely expected to leave rates unchanged.
Still, strength in the dollar, ahead of Wednesday’s Fed decision, put some pressure on oil prices.
Nonfarm payrolls data, a key labor market indicator, is due on Friday. Trump’s deadline for steep trade tariffs also lands on Friday, and comes as Washington signed a limited number of trade deals.
China PMIs, BOJ meeting on tap
In Asia, focus is also on key purchasing managers index data from top oil importer China, due on Thursday. The print is expected to provide more insight into the world’s second-largest economy, after it wound down a bitter trade war with the U.S. earlier this year.
The Bank of Japan is also set to decide on interest rates on Thursday, and is widely expected to leave them unchanged amid heightened uncertainty over trade and Japan’s political leadership.
Source : Investing.com