Oil prices traded in range on Wednesday ahead of Federal Reserve Chair Jerome Powell’s congressional testimony later in the day and as data showing British inflation remained sticky raised the possibility of a hawkish Bank of England policy decision this week.
Brent crude oil slipped 10 cents, or 0.13%, to $75.80 a barrel while the U.S. West Texas Intermediate (WTI) crude edged lower by 8 cents, or 0.11%, to $71.11 per barrel.
British inflation defied expectations that it would slow and held at 8.7% in May, data showed on Wednesday, boosting expectations that the Bank of England will raise interest rates by a hefty half a percentage point on Thursday.
“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 main market focus is on Fed officials due to speak later in the day, with Chair Powell’s congressional testimony on the economy on Wednesday and Thursday the highlight.
Two Fed policymakers and an economist nominated to join them on the central bank’s Washington-based board on Tuesday said their focus is on bringing down too-high inflation so that the U.S. economy can get back to sustainable growth, which could bolster oil demand.
However, should Powell prompt a hawkish return of rate cut expectations, the U.S. dollar could see some support, ING strategist Francesco Pesole said in a note.
A stronger U.S. dollar is bearish for oil as it makes commodities more expensive for holders of other currencies.
Oil prices drew some support from a possible drawdown in U.S. crude stocks, with Reuters poll among five analysts estimating that crude stockpiles fell by about 400,000 barrels on average in the week to June 16.
Official U.S. oil inventory data from the American Petroleum Institute industry group will be released later on Wednesday and the Energy Information Administration on Thursday, with both reports delayed by a day following the Juneteenth public holiday on Monday.