# Oil prices steady after U.S. stockpile swell
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-09
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Oil Prices Steady Amid US Inventory Increase and Fed Rate Hikes
Meta Description: Optimism over Chinese demand competes with rising U.S. inventories and Fed rate hikes. Analysts forecast support from China and falling inflation for oil
URL: https://financedigest.com/oil-prices-steady-after-u-s-stockpile-swellhtml

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By Shadia Nasralla

LONDON (Reuters) – Oil prices were steady on Thursday, as optimism over recovering Chinese demand was offset by U.S. [oil inventories](https://www.financedigest.com/oil-falls-from-one-month-high-after-u-s-fuel-inventory-surge.html "Oil falls from one-month high after U.S. fuel inventory surge") hitting their highest in months and signs the U.S. Federal Reserve could keep [raising interest rates](https://www.financedigest.com/boe-raises-rates-again-as-investors-look-towards-end-of-hikes.html "BoE raises rates again as investors look towards end of hikes").

Brent crude [futures gained](https://www.financedigest.com/dollar-gains-as-wall-street-retreats-on-future-fed-hikes.html "Dollar gains as Wall Street retreats on future Fed hikes") 30 cents to $85.39 a barrel by 0856 GMT, while U.S. West Texas Intermediate (WTI) crude futures inched up 26 cents to $78.73 a barrel. Both benchmarks have gained around 7% so far this week.

“Relentlessly rising U.S. commercial inventories and potentially entrenched inflation limit any immediate upside potential,” said PVM analyst Tamas Varga.

He said recovering Chinese demand and [falling inflation were set to support oil prices](https://www.financedigest.com/buy-off-plan-to-beat-stalling-house-prices-and-falling-rental-yields-says-jean-liggett.html "“Buy off-plan to beat stalling house prices and falling rental yields” says Jean Liggett ") in the second half of the year.

Crude oil stocks in the United States rose last [week to their highest since](https://www.financedigest.com/the-nasdaq-100-on-track-to-have-its-best-week-since-march-2010.html "The Nasdaq 100 On Track to Have its Best Week Since March 2010") June 2021, helped by higher production, the Energy Information Administration said.

U.S. gasoline and distillate inventories also rose last week.

U.S. Federal Reserve officials said more interest rate [rises are on the cards as the bank presses forward with its efforts to cool inflation](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"), sending bearish signals across risk assets like oil and equities. \[GLOB/MKTS\]

But the prospect of stronger [demand from China lent some support to oil](https://www.financedigest.com/oil-gains-after-iea-sees-demand-rising-to-record-high.html "Oil gains after IEA sees demand rising to record high") prices, as the world’s second-largest oil consumer ended more than three years of stringent zero-COVID policy.

We expect Chinese oil consumption to increase by around 1.0 million barrels a day this year, with strong growth emerging as early as [late in Q1,” analysts from ANZ bank wrote in a note](https://www.financedigest.com/in-loving-and-devoted-memory-king-charles-handwritten-note-to-late-queen.html "‘In loving and devoted memory’: King Charles handwritten note to late queen").

Overall, this should push [global demand up by 2.1 million](https://www.financedigest.com/black-panther-sequel-ignites-box-office-with-330-million-global-debut.html "‘Black Panther’ sequel ignites box office with 0 million global debut") barrels a day in 2023.

BP Azerbaijan declared force majeure on Azeri crude shipments from the Turkish port of Ceyhan on Feb. 7, after a massive [earthquake struck Turkey](https://www.financedigest.com/eus-eib-to-override-turkey-lending-ban-with-earthquake-aid.html "EU’s EIB to override Turkey lending ban with earthquake aid") and Syria early on Monday.

Brent’s front-month loading contract rose to a $3-a-barrel premium over contracts six months out, a market structure called backwardation, which indicates [traders seeing tight current supply](https://www.financedigest.com/keystone-oil-pipeline-restart-timetable-unclear-traders-worry-about-supply.html "Keystone oil pipeline restart timetable unclear; traders worry about supply").

(Additional reporting by Muyu Xu; Editing by Bernadette Baum)


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