Oil prices rose about 1% to a one-week high on Wednesday despite a surprise weekly build in U.S. crude inventories, as the dollar slid to a six-week low ahead of the U.S. Federal Reserve’s decision on interest rates which could affect the fuel demand outlook.
Brent futures rose 89 cents, or 1.2%, to $76.21 a barrel by 1:32 p.m. EDT (1732 GMT), while U.S. West Texas Intermediate (WTI) crude rose 77 cents, or 1.1%, to $70.44.
That puts both crude benchmark on track for their highest close since March 14.
The U.S. dollar fell to its lowest level since Feb. 3 against a basket of other currencies, supporting oil demand by making crude cheaper for buyers using other currencies.
The U.S. Energy Information Administration (EIA) said crude stockpiles rose 1.1 million barrels last week. ,
Analysts in a Reuters poll had forecast a 1.6-million barrel withdrawal. But the official data showed a smaller build than the 3.3-million barrel increase reported on Tuesday in industry data.
“The big story here is that build … in crude, which is enough to get us to the 22-month high in crude oil storage. We just have a lot of crude oil in storage and it’s not going to go away anytime soon,” said Bob Yawger at Mizuho.
U.S. crude stockpiles have grown since December, boosting inventories to their highest since May 2021. Gasoline and distillate inventories, meanwhile, fell last week by more than analysts expected.
Fed policy makers are scheduled to announce their interest rate decision at 2 p.m. EDT. The Fed has been raising rates to fight inflation but also wants to bolster financial stability following recent bank failures and bailouts that roiled markets.
Some investors expect the Fed to hike rates by just 25 basis points while some expect the central bank to pause its hiking cycle.
“It would be a big shock if the Fed reverted back to larger rate hikes now considering everything that’s happened this past couple of weeks,” said Craig Erlam, senior market analyst at OANDA.
WTI and Brent prices last week fell to their lowest since 2021 on concern that banking sector turmoil could trigger a global recession and cut oil demand. An emergency rescue of Credit Suisse Group AG (CSGN.S) over the weekend helped revive oil prices.
The Organization of the Petroleum Exporting Countries and its allies like Russia, a group known as OPEC+, is likely to stick to its deal on output cuts of 2 million barrels per day (bpd) until the end of the year, despite the plunge in crude prices, three delegates from the producer group told Reuters.