Oil crept higher as broader risk-on sentiment helped traders overlook fears of tighter monetary policy from the Federal Reserve.
West Texas Intermediate inched up 0.7% to settle above $75 a barrel, taking its cue from Wall Street which rose on bets that an upcoming inflationary gauge would show further softening. The day started on a sour note after two Fed officials said the bank will likely need to raise interest rates above 5% to combat inflation, but losses were trimmed after Fed chief Jerome Powell refrained from giving any further clues.
“Technically, the energy complex remains stuck in neutral, with a wide range for prices to swing inside of without creating a new trend,” analysts at wholesale-fuel distributor TACenergy wrote in a note to clients. “Fundamentally, the case for prices bottoming is getting stronger as lingering supply issues coincide with demand picking up both domestically and abroad.”
Oil rallied Monday after China provided refiners and traders with a generous import quota in its second allocation for 2023, as Asia’s biggest economy gears up for growth after dismantling its strict Covid restrictions late last year. That’s being countered by continued indications that the market is oversupplied, with the nearest portions of the futures curves for Brent and WTI trading in a bearish contango.
WTI for February delivery rose 49 cents to settle at $75.12 a barrel in New York.
Brent for March settlement rose 45 cents to settle at $80.10 a barrel.
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