Oil prices rose on Wednesday, gaining ground even as other risk assets dropped following the Federal Reserve’s fourth interest rate hike of the year.
The market was supported by another decline in US oil inventories as refineries picked up activity ahead of the winter heating season.
The oil market held its rally even as stocks fell and the dollar rallied after Federal Reserve Chair Jerome Powell said it was premature to think about pausing rate increases.
Brent crude settled up US$1.51, or 1.6 per cent, to US$96.16 while US West Texas Intermediate (WTI) crude settled up US$1.63, or 1.8 per cent, to US$90 on the nose. The gains did ebb after settlement.
The US Federal Reserve boosted interest rates by 75 basis points to bring down consumer inflation that has reached a four-decade high, though the central bank signaled future increases may be in smaller increments.
So far the Fed’s moves have not affected the strong labour market, though its actions operate with a lagged effect.
Powell suggested it was premature to think about ending the interest-rate increases. Wall Street quickly gave back its gains, while the Treasury market also fell, boosting yields.
Oil held firm, a signal of worries about global energy supply.
US crude oil stocks fell about 3.1 million barrels on the week, according to federal data. Petrol inventories while distillate stocks rose only marginally ahead of the key heating season, when demand is expected to pick up.