HOUSTON: Oil prices were little changed on Wednesday, giving up early gains, as markets weighed an unexpected, large build in US crude oil against bullish demand growth forecasts and optimism over the Federal Reserve likely pausing interest rates.
Brent crude futures were flat at $74.29 a barrel by 12:45 p.m. ET (1645 GMT). US West Texas Intermediate (WTI) crude was up 1 cent at $69.43.
Both benchmarks had climbed more than 1.5% earlier in the session. It rose more than 3% the previous day on expectations of rising fuel demand after China’s central bank lowered a short-term lending rate.
US crude oil stocks rose by about 8 million barrels in the week ended June 9, according to data from the Energy Information Administration. Analysts had estimated a 500,000-barrel decline.
Gasoline and diesel stocks also rose more than expected. Market participants also expect the US central bank’s Federal Open Market Committee (FOMC) to pause interest rate hikes because of uncertainty over the economic outlook and the effects of 10 rate increases since March 2022.
Higher interest rates strengthen the dollar, making commodities denominated in the US currency more expensive for holders of other currencies. A pause in the Fed’s rate increases would spur economic growth and oil demand, supporting prices.
“Today, oil will take its cue from the Federal Open Market Committee. The market is widely pricing in the fact that the Fed will pause from their historic rate-hiking cycle, which is supportive of the price of oil,” said Price Group analyst Phil Flynn.
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