Oil Rally Pauses as Traders Await US Stockpile Data

Oil steadied as traders await official US inventory data following a volatile start to the week marked by unexpected OPEC+ supply cuts.

(Bloomberg) — Oil steadied as traders await official US inventory data following a volatile start to the week marked by unexpected OPEC+ supply cuts.

West Texas Intermediate held near $80 a barrel after closing at the highest level in almost 10 weeks. The industry-funded American Petroleum Institute reported nationwide crude stockpiles fell by 4.3 million barrels, including a drop at the key storage hub in Cushing, Oklahoma. Figures from the US Energy Information Administration are due later Wednesday.

Crude rallied by almost 7% in the first two days of the week after the Organization of Petroleum Exporting Countries and its allies blindsided the market with a surprise supply cut. The cartel’s move, apparently aimed at investors betting against gains, reinvigorated the debate among leading banks about whether crude can rally back to $100 a barrel.

Oil has risen by more than 20% since its lows in March, when a banking crisis harmed appetite for risk assets. Before the lift from the OPEC+ cut, the market was buoyed by expectations for a rebound in Chinese demand after the end of its Covid Zero policy. A weaker dollar has helped to boost the allure of commodities priced in the US currency.

Crude’s gain came despite US data on Tuesday that pointed to a slowdown in the labor market, with the figures adding to speculation that the Federal Reserve may pause its run of rate hikes as inflation cools.

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