# Oil prices hold firm amid hopes for economic growth Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-01-12 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Oil Prices Steady on Fed Rate Hike Outlook Meta Description: Oil prices stabilise after U.S. Federal Reserve signals gradual rate hikes, supporting demand. Crude oil hits highest levels since Omicron emergence. URL: https://financedigest.com/oil-prices-hold-firm-amid-hopes-for-economic-growthhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-01-12t030935z2lynxmpei0b02ertroptp4global-oil-1736836451302-compressed.jpg) By Koustav Samanta and Sonali Paul SINGAPORE (Reuters) -Oil prices steadied on Wednesday, following steep gains in the previous session after the U.S. Federal Reserve chief signalled the central bank may raise rates more slowly than expected, which should help support [oil demand](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside"). Brent and U.S. [crude oil](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") are trading at their highest levels since the highly contagious COVID-19 Omicron emerged in late November, as it has not hit fuel demand the way previous variants did. U.S. West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.3%, to $81.42 a barrel at 0555 GMT, adding to a 3.8% jump in the previous session. Brent crude futures were up 6 cents, or 0.07%, at $83.78 a barrel, after jumping 3.5% in the previous session. Federal Reserve Chairman Jerome Powell said on Tuesday the economy should weather the current COVID-19 [surge with only “short-lived” impacts and was ready for the start of tighter monetary policy](https://www.financedigest.com/yen-retreats-after-boj-policy-tweak-sparked-surge.html "Yen retreats after BOJ policy tweak sparked surge"). While Powell reassured the Fed will bring down rising inflation, which strengthened the rate hike outlooks in March, he also said the Fed is capable of leaving strong [economic growth](https://www.financedigest.com/addressing-the-credit-gap-to-unlock-economic-growth-in-africa.html "Addressing the credit gap to unlock economic growth in Africa") intact. That may lift the demand of growth-sensitive [crude oil,”](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns") said Leona Liu, analyst at Singapore-based DailyFX. Data from the American Petroleum Institute (API) industry group, however, painted a weaker picture on [fuel demand](https://www.financedigest.com/oil-falls-on-concerns-economic-slowdown-may-dent-fuel-demand.html "Oil falls on concerns economic slowdown may dent fuel demand"), with a smaller decline in crude stockpiles than expected and bigger builds than expected in gasoline and distillate inventories. Crude stocks fell by 1.1 million barrels for the [week ended](https://www.financedigest.com/european-shares-end-five-day-losing-streak-still-down-for-the-week.html "European shares end five-day losing streak, still down for the week") Jan. 7, according to [market sources citing API](https://www.financedigest.com/telecom-api-market-api-set-to-redefine-telecom-sector-as-telecom-2-0-gets-closer-to-reality.html "Telecom API Market – API Set to Redefine Telecom Sector as Telecom 2.0 Gets Closer to Reality") figures. That was less than the 1.9 million barrel draw that 10 analysts [polled by Reuters](https://www.financedigest.com/germany-home-prices-to-sink-nearly-6-this-year-reuters-poll.html "Germany home prices to sink nearly 6% this year – Reuters Poll") had expected. Although market participants appear to be quite optimistic on overall growth in the first quarter, the recent API [stocks show subduing demand](https://www.financedigest.com/stocks-with-greater-socially-responsible-investor-demand-saw-weaker-losses-during-the-covid-19-crash.html "Stocks with greater socially responsible investor demand saw weaker losses during the COVID-19 crash"). So it may be too early to be positive on the price rally,” analyst Liu said. Gasoline stockpiles rose by 10.9 [million barrels, compared with analysts’ expectations for a 2.4 million barrel build](https://www.financedigest.com/bosch-to-build-215-million-plant-in-central-mexico.html "Bosch to build 5 million plant in central Mexico"). Distillate inventories, which [include diesel and heating oil](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream"), rose by 3 million barrels compared with forecasts for a 1.8 million barrel increase. However, supporting the market was the U.S. Energy Information Administration’s [upgraded oil demand outlook](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook") released on Tuesday, seeing total U.S. [demand rising](https://www.financedigest.com/oil-rises-on-prospect-of-opec-supply-cut-demand-growth.html "Oil rises on prospect of OPEC supply cut, demand growth") by 840,000 barrels per day (bpd) in 2022 from last year, up from a previous forecast for an increase of 700,000 bpd. At the same time, the EIA pared its production outlook for 2022, expecting U.S. [oil output to rise](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") by 640,000 bpd, down from an earlier forecast for an increase of 670,000 bpd. (Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Richard Pullin and Jacqueline Wong) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---