Crude oil futures rose Wednesday as Federal Reserve officials indicated that interest rates have likely reached their peak.
The West Texas Intermediate contract for April gained 87 cents, or 1.13%, to settle at $77.91 a barrel. April Brent futures added 69 cents, or 0.84%, to settle at $83.03 a barrel.
Fed officials agreed during the central bank’s January meeting that interest rates have likely peaked, according to minutes from the proceeding released Wednesday. The officials also generally agreed that rates should not be cut until they had more confidence inflation was under control.
The market has pushed back its expectations on when the Fed will reduce rates as inflation remains stubborn in the U.S., with a first cut now generally expected in June rather than in March or May. Lower interest rates typically stimulate economic growth, which fuels crude oil demand.
U.S. crude and the global benchmark declined more than 1% on Tuesday as traders took profits after the oil market rallied last week as the Middle East once again appeared on the brink of wider conflict.
“Oil prices took yesterday as day of correction which was inspired by a lack of any further conflict news from the world’s clash points as markets had to settle on what was bothering the macro world,” John Evans, an analyst at oil broker PVM, wrote in a note Wednesday.
Tensions continued to simmer in the Middle East this week after Israel launched airstrikes against Hezbollah in Lebanon, Houthi militants struck another cargo vessel Monday and as Iran now blames Israel for explosions that hit a natural gas pipeline in the Islamic Republic on Feb. 14.
White House Middle East envoy Brett McGurk is heading to Cairo on Wednesday to continue talks on a temporary Gaza cease-fire in exchange for Hamas releasing hostages. The Biden administration wants a cease-fire in place before the start of Ramadan, which begins March 10 after sunset.
The U.S. has warned Israel against a ground invasion of the southern Gaza city of Rafah without a credible plan in place to protect civilians there. Israeli war Cabinet member Benny Gantz vowed Sunday that Israel will push into Rafah if Hamas does not release the remaining hostages by Ramadan.
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