Oil futures were on track Thursday to notch their fourth session gain in a row, a day after the Federal Reserve delivered another quarter-point interest-rate hike and signaled one more increase this year.
West Texas Intermediate crude for May delivery
rose 26 cents, or 0.4%, to $71.16 a barrel on the New York Mercantile Exchange. Prices for t he front-month contract gained 1.8% Wednesday to end that session at the highest since March 14.
May Brent crude
was up 24 cents, or 0.3%, at $76.93 a barrel on ICE Futures Europe.
Back on Nymex, April gasoline
climbed by 1.4% to $2.6293 a gallon, while April heating oil
lost 0.7% to $2.7218 a gallon.
April natural gas
rose 0.9% to $2.189 per million British thermal units.
Crude prices ended higher Wednesday after the Federal Reserve delivered a quarter-point rate hike, as expected. The Fed’s forecast showed policy makers expect just one more rate increase this year.
See: ‘Very unclear’: Powell’s press conference provided more questions than answers. Here are 4 big ones economists still have.
“The oil market became oversold last week and futures fell into key support that was also a key downside technical target near $66 [a] barrel,” analysts at Sevens Report Research wrote in Thursday’s newsletter. “That opened the door to a rebound this week.”
Wednesday’s “bullish-leaning” data from the Energy Information Administration and “dovishly interpreted Fed served as a dual-pronged catalyst for the bounce in futures to continue,” they said. The EIA on Wednesday reported a 1.1 million-barrel rise in last week’s U.S. crude inventories, along with a 6.4 million-barrel drop in gasoline stockpiles.
Crude has bounced back since tumbling last week to a 15-month low on fears that trouble in the banking sector could lead to a significant economic downturn. WTI and Brent futures settled Wednesday at their highest since March 14.
“While no one can say with confidence that a banking crisis has been averted, there is growing confidence that the actions taken by central banks, regulators, and governments have significantly reduced the odds of one, particularly a severe scenario, and that is ultimately good for the economy and crude demand,” said Craig Erlam, senior market analyst at OANDA, in a note.
U.S. government data Thursday showed at the number of Americans who applied for unemployment benefits last week slipped to a three-week low of 191,000, showing that the labor market remains strong. Even so, the number of raw or actual claims — before seasonal adjustments — was much higher last week compared to the same week a year earlier.
Near term, the oversold bounce in oil prices “can continue into the mid- or even upper-$70s,” the Sevens Report analysts said. “In spite of the dovish Fed, risks remain skewed to the downside for oil and the refined products as a 2023 recession remains very likely.”
Natural-gas futures, meanwhile, held onto a gain for the session after the EIA on Thursday said domestic natural-gas supplies fell by 72 billion cubic feet for the week ended March 17. That nearly matched the average analyst forecast for a decline of 71 billion cubic feet, based on a survey conducted by S&P Global Commodity Insights.