Oil prices rise more than 1% on Fed rate cut outlook, signs of rising gasoline demand

Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area near Long Beach, California July 30, 2013.
David Mcnew | Reuters

Crude oil futures rose Wednesday ahead of Federal Reserve Chairman Jerome Powell’s testimony before Congress and the release of U.S. inventory data.

The West Texas Intermediate contract for April gained 86 cents, or 1.10%, to $79.01 a barrel. May Brent futures added 66 cents, or 0.80%, to $82.70 a barrel.

Traders will be closely watching Powell’s testimony before the House Financial Services Committee for more detail on the possible timing of interest rate cuts that the market is expecting this year.

“Public enemy No 1 of a protracted rally and the $90/bbl oil price is the uncertainty surrounding interest rate cuts,” Tamas Varga, an analyst at oil broker PVM, wrote in a Tuesday research note.

“The Fed chair’s testimony and the ECB interest rate decision on Thursday could revive hopes for a June reduction in borrowing costs,” Varga said.

The U.S. Energy Information Administration will release weekly data on the U.S. crude stockpile data later this morning.

Oil prices have been creeping higher this year, booking two consecutive months of gains, as OPEC+ has slashed production and geopolitical tensions continue to simmer in the Middle East.

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