WTI Crude Oil stable ahead of Powell testimony, oil inventory data

Key points

Futures on US West Texas Intermediate Crude Oil held steady on Wednesday as market focus sets on Fed Chair Jerome Powell’s congressional testimony later today and after official data showed UK inflation remained elevated, reinforcing the case for a rate hike by the Bank of England on Thursday.

Two Federal Reserve policy makers said on Tuesday that their main focus was on bringing inflation back down to target so that the economy could return to sustainable growth. This would be beneficial for oil in terms of demand.

Yet, according to ING strategist Francesco Pesole, if Fed Chair Powell’s testimony leads to a hawkish return of rate cut expectations, this could underpin the US Dollar. And a stronger dollar would pressure dollar-priced commodities such as Oil.

In the UK, headline consumer price inflation remained steady at 8.7% in May, while confounding market expectations of a slowdown to 8.4%.

Core CPI inflation was reported to have accelerated to 7.1% in May, or the highest level since March 1992.

The Bank of England is expected to deliver a 13th successive interest rate hike at its policy meeting tomorrow, which would bring borrowing costs to a new 15-year high.

Oil traders will be also expecting the industry report on oil inventories by the American Petroleum Institute, scheduled for release later in the day, as well as on the official data by the US Energy Information Administration tomorrow.

As of 12:22 GMT on Wednesday WTI Crude Oil Futures for August delivery were inching down 0.03% to trade at $71.17 per barrel.

At the same time, Brent Oil Futures for August delivery were inching up 0.03% on the day to trade at $75.92 per barrel.