Oil Prices Steady at One-Month High Ahead of U.S. Inventory Data and CPI Release

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Oil prices were steady in early Asian trade on Wednesday, holding near one-month highs, as investors awaited fresh cues from US inflation data due later in the day, with focus also turning to a potential build in US crude inventories. Brent oil futures rose 0.1% to $85.67 a barrel, while West Texas Intermediate crude futures were flat at $81.55 a barrel. Both contracts surged 1.6% and 2.2%, respectively, on Tuesday amid growing hopes that the US Federal Reserve will taper its hawkish stance, while a recent supply cut by the Organization of Petroleum Exporting Countries and allies (OPEC+) continued to provide support.

Data from the American Petroleum Institute showed that US oil inventories unexpectedly grew by about 300,000 barrels in the week to April 7. But this was also partly driven by a 1.6 million barrel draw from the Strategic Petroleum Reserve. Government data due later in the day is expected to provide more clarity on inventories in the world’s largest oil consumer, with analysts forecasting a 583,000 barrel draw. With a raft of recent economic readings pointing to a sluggish recovery in China, markets are betting that the government will likely roll out more stimulus measures to help support growth. Focus this week is also on monthly oil market reports from the OPEC and the International Energy Agency. Both groups expect a recovery in China to drive oil demand to record highs this year.

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