Oil prices rose on Wednesday after surging by more than 4 per cent the previous day amid concerns of tightening crude supply.
Brent, the benchmark for two thirds of the world’s oil, was 1.12 per cent higher at $84.63 a barrel at 2.23pm UAE time while West Texas Intermediate, the gauge that tracks US crude, was up 1.4 per cent at $78.22 a barrel.
On Tuesday, Brent settled 3.33 per cent higher at $83.69 a barrel while WTI closed 4.09 per cent higher at $77.14.
US crude stocks, an indicator of fuel demand, fell by about 2.2 million barrels last week amid expectations of a rise, according to data from the American Petroleum Institute.
"But, [petroleum] inventories jumped more than 5 million barrels during the same week. That could limit the upside potential triggered by data," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank."
Turkey has ordered the resumption of oil flows to the 1 million barrel-per-day crude terminal after it was found that pipelines and storage tanks were not damaged by a massive earthquake on Monday.
The BTC terminal, which exports Azeri and Iraqi crude to international markets, is expected to reopen today.
“Oil may rally a little bit more as many energy traders are still trying to figure out how robust will China’s reopening be this quarter,” said Mr Moya.
“A strong labour market in the US should prove to be supportive of WTI crude in the short-term, which could pave the way for a rally back towards the $80 level.”
US Federal Reserve chairman Jerome Powell said on Tuesday that interest rates would have to be raised to a level higher than currently anticipated by markets.
Mr Powell, who was speaking an event in Washington, said it would probably take a “significant period of time” to bring down inflation, given strong labour market data, according to media reports.
Daniel Richards, Mena economist at Emirates NBD, said Mr Powell "did predict that inflation would slow this year, and some read his commentary as not having been as hawkish as it could have been given”.
Total US non-farm payrolls added 517,000 jobs in January, said the Labour Department last week, far exceeding a Reuters estimate of 185,000. It also surpassed the number of jobs added in January 2022 by 13,000.
The unemployment rate fell to 3.4 per cent, from 3.5 per cent, a new 53-year low.
Last week, the Fed raised interest rates by 25 basis points and indicated that more increases were to come.
This was its eighth rise since last year. The latest announcement brings the Fed's target range to between 4.5 per cent and 4.75 per cent — about 50 basis points away from its end-of-year projection of 5.1 per cent.
Oil prices have fallen for two straight weeks even as China, the world's second-largest economy and top crude importer, reopens after nearly three years of stringent Covid-19 measures.
"Judging by the latest price easing, the oil market seems relaxed that neither China’s reopening nor Western sanctions against Russia significantly limit supplies," Norbert Rucker, head economics and next generation research at Julius Baer, said.
"We see lower prices longer term, in line with the futures market’s expectations. The market mood bounce seemingly was short-lived and has already reversed its course as of late," said Mr Rucker.