Oil prices moved little in early Asian trade on Thursday, sticking near two-week highs as markets gauged mixed signals on U.S. crude inventories, while also awaiting more cues on monetary policy from the Federal Reserve.
Crude markets saw a strong run-up this week as interest rate cuts in China sparked some bets on a recovery in demand later this year. A surge in broader commodity markets also fueled bets on tighter oil supplies.
Weakness in the dollar somewhat aided crude after Fed Chair Jerome Powell presented a less hawkish stance than some were expecting during a Senate testimony. Powell is now set to testify before the Senate Banking Committee later in the day, providing more cues on monetary policy.
Brent oil futures rose 0.2% to $77.07 a barrel, while West Texas Intermediate crude futures were flat at $72.48 a barrel by 21:40 ET (01:40 GMT). Both contracts were close to their strongest levels in two weeks.
U.S. inventories seen shrinking, but gasoline stockpiles rise
Data from the American Petroleum Institute (API) showed on Wednesday that overall U.S. oil inventories saw a bigger-than-expected drawdown in the week to June 16, reflecting some strength in U.S. crude demand.
But the API data also showed that gasoline inventories likely grew for a third straight week, indicating that U.S. fuel demand remained muted despite the onset of the travel-heavy summer season. Gasoline futures inched lower after the reading.
The API data usually heralds a similar trend in official Energy Information Administration (EIA) data due later on Thursday. Both readings were delayed this week on account of the Juneteenth holiday.
The EIA reading is expected to show a build of about 1.9 million barrels in the past week, after a bumper 7.9 million barrel build through the week to June 9. Gasoline inventories are also expected to have grown.
Fed remains in focus ahead of Powell testimony
Oil markets also remained largely focused on a testimony before the Senate Banking Committee by Fed Chair Jerome Powell later in the day, for more cues on the path of interest rates.
Powell told the House Financial Services Committee that relatively high U.S. inflation was likely to invite more rate hikes from the central bank, although he did not specify whether rates would rise in July.
Still, markets are pricing in an over 70% chance for a July hike. Rising interest rates have weighed on oil prices this year by brewing concerns over worsening economic conditions, which could dent crude demand.
