Oil rises as signs of slowing US inflation ease recession concerns
Oil prices rose on Wednesday as signs of slowing inflation in the US eased fears that the world's largest oil user could fall into recession due to higher interest rates, and a weakening dollar bolstered its purchasing power.
Brent crude futures rose 8 cents, or 0.1%, to $85.54 a barrel at 0727 GMT. West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.2%, to $79.07 a barrel.
Both benchmarks rose on the second day after gaining around 1% in the previous session.
Signs that inflation is cooling have also raised expectations that the Fed may pause rate hikes. Sentiment has changed with the positive company reporting in general.
Expectations of lower interest rates helped lower the dollar index, which supported oil prices because the weaker dollar makes the commodity cheaper for buyers holding other currencies.
All eyes will be on the meeting on Wednesday, where the Organization of the Petroleum Exporting Countries and allies, including Russia, and producers are expected to approve the current production targets they agreed on in November.
According to a report, OPEC's oil production fell in January as Iraq's exports fell and Nigeria's output did not recover. The deficit is larger than the 780,000-barrel deficit in December.
OPEC+ will likely stick to current production targets, but Russia is looking to increase oil exports to Asian buyers with deep discounts that could destabilize oil markets.
The global growth forecasts raised by the IMF and the expectation of strong pent-up demand from China due to increased activity also support oil prices.
Also, data from the American Petroleum Institute (API) industry group showed that crude inventories increased by about 6.3 million barrels in the week ended Jan. This was a larger increase than the 400,000 barrels analysts had expected on average.
Distillate stocks, which include diesel and heating oil, increased by about 1.5 million barrels, contrary to analysts' expectations of a decline of 1.3 million barrels.
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