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Oil prices creep higher on robust global demand outlook

A view shows the crude oil terminal Kozmino on the shore of Nakhodka Bay close to the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

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SINGAPORE, Sept 14 (Reuters) – Oil prices inched higher in early trade on Wednesday as OPEC stuck to forecasts for robust global fuel demand growth, offsetting concerns of another U.S. Federal Reserve interest hike in a few days after consumer prices unexpectedly rose in August.

Brent crude futures rose 3 cents to $93.20 a barrel by 0116 GMT, after settling 0.9% lower on Tuesday. U.S. West Texas Intermediate crude was at $87.41 a barrel, up 10 cents, or 0.1%.

THE BUSINESS of the Petroleum Exporting Countries (OPEC) on Tuesday reiterated forecasts for growth in global oil demand in 2022 and 2023, citing signs that major economies were faring much better than expected despite headwinds such as for example surging inflation.

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Oil demand increase by 3.1 million barrels each day (bpd) in 2022 and by 2.7 million bpd in 2023, OPEC said in a monthly report, leaving its forecasts unchanged from last month. read more

“The resilient moves in oil prices claim that undersupply continues to be a primary issue in the physical markets, especially after OPEC kept its positive demand outlook on Tuesday,” said Tina Teng, an analyst at CMC Markets.

Oil prices were also supported by reports that the U.S. Biden administration was considering refilling its strategic oil reserve, in addition to lower market expectations for a revival of the West’s 2015 nuclear cope with Iran, said ANZ Research analysts in an email.

Weighing on oil and financial markets, however, was a hotter-than-expected U.S. inflation report on Tuesday that dashed hopes that the Fed could cut back its rate policy tightening in the coming months. read more

Fed officials are set to meet up next Tuesday and Wednesday, with inflation remaining way above the U.S. central bank’s 2% target.

In China, tough ongoing COVID-19 curbs are squeezing fuel demand at the world’s largest oil importer. read more

“China’s zero-COVID policy remains intact and that may keep any rebounds that emerge on the coming weeks capped,” said Edward Moya, a senior market analyst at OANDA, in an email.

“The U.S. may be the big wildcard and when that demand outlook weakens, oil could resume its downward trajectory that is in place because the start of summer.”

On the supply side, U.S. crude stocks rose by about 6 million barrels for the week ended Sept. 9, in accordance with market sources citing American Petroleum Institute figures on Wednesday.

The U.S. government will release inventory data at 10: 30 a.m. EDT (1430 GMT) on Wednesday.

(This story has been corrected to improve your day in first paragraph to Wednesday, not Monday)

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Reporting by Isabel Kua; Editing by Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.

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