Oil remains stable ahead of Powell’s congressional testimony.

Oil Prices Stabilize Ahead of Powell’s Testimony and Hawkish Bank of England Decision

By Rowena Edwards

LONDON (Reuters) – Oil prices are showing signs of stability on Wednesday as investors eagerly await Federal Reserve Chair Jerome Powell’s congressional testimony later in the day. Additionally, data revealing that British inflation remains high has raised the possibility of a hawkish policy decision by the Bank of England this week.

Brent futures remain steady at $75.90 a barrel as of 0929 GMT, while U.S. West Texas Intermediate (WTI) crude futures have seen a slight increase of 6 cents, or 0.08%, reaching $71.25.

The latest data shows that British inflation has defied expectations of a slowdown, holding at 8.7% in May. This puts additional pressure on the Bank of England, which is forecasted to raise interest rates for the 13th consecutive time.

“Countries are struggling to rein in inflation… and that’s going to dampen growth and threaten recessions across the globe,” said Craig Erlam, senior markets analyst at OANDA.

The focus of the market is currently on the upcoming speeches by Federal Reserve officials, with Chair Powell’s congressional testimony on the economy being the highlight on Wednesday and Thursday.

Two Fed policymakers, along with an economist nominated to join them on the central bank’s board, have expressed their focus on reducing high inflation levels to ensure sustainable growth in the U.S. economy. This could potentially boost oil demand.

However, ING strategist Francesco Pesole notes that if Powell’s remarks lead to expectations of rate cuts, the U.S. dollar may receive support.

A stronger U.S. dollar is generally bearish for oil prices as it makes commodities more expensive for holders of other currencies.

Oil prices have also received some support from the possibility of a drawdown in U.S. crude stocks. A Reuters poll of five analysts estimates that crude stockpiles fell by an average of 400,000 barrels in the week ending June 16.

Official U.S. oil inventory data from the American Petroleum Institute will be released later on Wednesday, followed by the Energy Information Administration’s report on Thursday. Both reports have been delayed by a day due to the Juneteenth public holiday on Monday. [EIA/S] [API/S]

(Reporting by Rowena Edwards, additional reporting by Katya Golubkova in Tokyo and Trixie Yap in Singapore; Editing by Emelia Sithole-Matarise)

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