Oil Extends Gains on Weaker Dollar, U.S. Crude Stocks’ Drop

In early Wednesday trade, oil prices inched higher, extending gains from the previous two days, as the dollar weakened after Federal Reserve Chair Jerome Powell sounded less aggressive on interest rates than markets had expected and as U.S. crude stocks unexpectedly decreased.

At 9.57 a.m. (Thai time), Brent oil futures gained 24 cents, or 0.29%, to $8393 per barrel, following a 3.3% increase in the prior session.

After rising by 4.1% the previous day, U.S. West Texas Intermediate (WTI) oil futures rose 33 cents, or 0.43%, to $77.47 per barrel today.

The dollar index was down slightly at 103.29 in early trade, extending losses following Powell’s comments on Tuesday.

The market is betting that the largest economy and oil user in the world, the United States, can escape a greater downturn in economic activity or perhaps a recession thanks to less aggressive interest rate hikes.

According to market sources, a decrease of around 2.2 million barrels in oil stocks was reported by the American Petroleum Institute industry organization for the week ending February 3.

That was a surprise to the nine analysts who Reuters polled, all of whom predicted a rise in crude stocks of 2.5 million barrels.

Gasoline stocks increased by around 5.3 million barrels and distillate stocks, which include diesel and heating oil, increased by about 1.1 million barrels, both of which are larger increases than was anticipated.