Oil held its biggest gain in a week as traders counted down to a high-stakes OPEC+ meeting on supply, and weighed signs that the Federal Reserve is done raising interest rates.
Global benchmark Brent traded below $82 a barrel after rallying by more than 2% on Tuesday, with West Texas Intermediate under $77. The producer group is due to meet online on Thursday to set policy for 2024, but has yet to resolve a dispute over output quotas for some African members, according to delegates.
Crude’s gain has been supported by a declining dollar, with a Bloomberg gauge of the US currency sinking to the lowest level since August. Comments from Federal Reserve policymakers including Governor Christopher Waller suggested the central bank is set to halt its run of rate increases. A weaker greenback makes commodities more attractive for overseas buyers.
“The US dollar was dragged lower on a build-up in dovish expectations, which was very much cheered on by oil prices,” said Yeap Jun Rong, market strategist for IG Asia Pte in Singapore. Meanwhile, “all eyes will be on whether the bloc will be able to do more to support prices.”
Oil remains on track for a back-to-back monthly decline on increased supply from countries outside the Organization of Petroleum Exporting Countries, boosting pressure on the cartel and its allies to impose deeper output cuts. The International Energy Agency said earlier this month that the global crude market was on course to flip back into a surplus next year.
In the US, meanwhile, the industry-funded American Petroleum Institute reported that nationwide inventories fell 817,000 barrels last week, according to people familiar with the figures. Stockpiles at Cushing also declined. If confirmed by government data later Wednesday, it would be the first drop in six weeks for levels both nationally and at the key oil storage hub.
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