Oil prices held firm in Wednesday’s Asian session, retracing some earlier gains amid a surprising build in U.S. crude stocks and anticipation of the Federal Reserve’s upcoming rate decision.
Earlier this week, crude surged on reports that the U.S. plans to sanction major buyers of Russian oil to pressure Moscow over its conflict with Ukraine. Gains were further supported by progress in U.S.-EU trade talks after a recent agreement was reached.
Yet, momentum waned following data from the American Petroleum Institute showing a 1.5 million barrel increase in U.S. crude inventories for the week ending July 25, contrary to expectations of a 2.5 million barrel drawdown. This unexpected stockpile growth cast some doubt on demand strength in the world’s largest oil consumer.
As markets await official inventory numbers due later Wednesday, attention remains fixed on the Federal Reserve’s two-day meeting conclusion. The central bank is widely expected to hold interest rates steady within the current 4.25% to 4.50% range.
Meanwhile, a strong U.S. dollar ahead of the Fed announcement has added some downward pressure on oil prices.
Looking ahead, Friday’s nonfarm payrolls report will provide crucial insight into the labor market, while President Trump’s tariff deadline arrives the same day, coming after Washington finalized a few limited trade deals.
In Asia, eyes are on China’s PMI data due Thursday, which will offer clues on the health of the world’s largest oil importer following the easing of U.S.-China trade tensions earlier this year.
Also on Thursday, the Bank of Japan is expected to keep rates unchanged amid ongoing uncertainty over trade and political leadership in Japan.
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