Oil Prices Higher on Falling U.S. Crude Inventories

Oil prices were higher on Wednesday after trading lower on Tuesday following reports from the American Petroleum Institute (API) that showed U.S. crude inventories dropped by 4.2 million barrels last week. Also pressuring oil prices was the production cut implemented last month by OPEC, which has continued despite pressure from U.S. President Donald Trump to return to prior production levels. An official confirmation of U.S. crude inventories will be released later today by the Energy Information Administration (EIA).

U.S. WTI was up 0.90 percent to $56.00 per barrel as of 2:04 p.m. HK/SIN. Brent crude futures were 0.67 percent higher, to $65.65 per barrel. President Trump has accused OPEC of trying to control oil prices, but the record-high production levels in the U.S. have prevented prices from rallying significantly.

On Monday, analysts from Goldman Sachs forecast that Brent crude could easily trade in the $70-$75 per barrel range, though they commented that prices will eventually be sent lower thanks to high U.S. production and rising low-cost output from both OPEC and Russia.

Currency Swings
The U.S. dollar was trading near three-week lows on Wednesday after Federal Reserve Chairman Jerome Powell commented that the Fed would remain “patient” on interest rate hikes in 2019. Though the announcement did not provide any new insights, it seems investors are searching for bearish factors to push the dollar lower. Also pressuring the greenback was a rally by the British pound after Prime Minister Theresa May offered the option for extending the Brexit, which could avoid a tumultuous exit from the European Union.

The dollar was modestly lower against the yen on Wednesday afternoon, trading down 0.02 percent to 110.55. The pound surged 0.14 percent against the dollar to $1.3232. The dollar was also lower against the euro, trading at $1.1374.

Traders are now watching the meeting between President Trump and North Korean leader Kim Jong Un later today, after he meets with Vietnamese Prime Minister Nguyen Xuan Phuc.