The price of oil jumped by more than $1 per barrel, continuing yesterday's rally, helped by the weakening of the US currency and statements by Fed Chairman Powell.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.37%, to 103.04.
Yesterday, WTI crude oil rose by 4.04%, recording the largest increase in three months, as Powell only confirmed that the Fed will continue to tighten monetary policy, dispelling investors' fears that the Central Bank may move to a more hawkish policy.
Powell said that the “disinflationary” process has begun and that he expects a significant decline in inflation this year - remarks that echoed what he said after the Fed meeting last week. According to the CME FedWatch Tool, markets currently see a 70.2% probability of an additional 25 basis point rate hike at the Fed's May meeting after a similar move in March. A week ago, this probability was estimated at only 37.4%.
The rise in oil prices was also driven by data from the American Petroleum Institute, which indicated a reduction in oil inventories in the United States for the week ended February 3, by 2.18 million barrels. This was the first decline since the week ending December 23, 2022, that is, the first decline in 2023. Market participants expected an increase in inventories by 2.15 million barrels. Nevertheless, gasoline inventories increased by about 5.3 million barrels, and distillate inventories, including diesel and heating oil, rose by about 1.1 million barrels. The official report from the US Department of Energy will be published today at 15:30 GMT. Consensus estimates suggest an increase in oil inventories by 2.457 million barrels.