Oil prices, which marked their lowest close in a month yesterday, climbed on Wednesday as strengthening expectations of a US Federal Reserve (Fed) rate cut and a decline in the country's crude inventories reinforced signals of strong demand.
International benchmark Brent crude was trading at $61.96 per barrel at 9.50 a.m. local time (0650 GMT), up 0.29% from the previous close of $61.80.
US benchmark West Texas Intermediate (WTI) also increased by about 0.25% to $58.03, compared to $57.88 in the prior session.
Payroll processing company ADP data showed private sector employment fell by 13,500 last week in the US, indicating a faster pace of job losses in the sector.
Analysts noted that every data point that could influence the Fed's December meeting is being closely monitored, adding that the softening labor market is boosting expectations for a rate cut.
Market pricing now shows more than an 85% probability of a rate cut in December. The Fed's Beige Book, set to be released later today, is expected to provide deeper insight into the country’s economic outlook.
Meanwhile, US Treasury Secretary Scott Bessent said the process to determine potential candidates to replace Fed Chair Jerome Powell, whose term ends in May 2026, is moving forward.
Bessent said President Donald Trump is highly likely to announce the new Fed chair before Christmas, adding that there are five strong candidates and that each left a positive impression on him.
US dollar index fell 0.5% to 99.6 on Tuesday amid expectations of Fed easing and was moving sideways in early trade. Analysts say a low-rate environment could weaken the dollar, support oil demand, and put upward pressure on prices.
A sector report showing a decline in crude stocks in the world’s largest oil consumer also supported the upward movement in prices.
American Petroleum Institute (API) estimated that commercial crude inventories fell by 1.9 million barrels last week, compared with a market expectation of a 1.3-million-barrel decline.
The US Energy Information Administration (EIA) will release official inventory data later today.
By Humeyra Ayaz
Anadolu Agency
energy@aa.com.tr