Oil rebounded on Thursday after sliding 1% in the previous session as concerns over tight supplies heading into winter eclipsed fears of a global recession.
Brent crude futures rose 15 cents, or 0.2%, to $89.98 per barrel by 0657 GMT, recouping their losses in early Asia trade. U.S. West Texas Intermediate (WTI) crude rose 10 cents to $83.04.
Both benchmarks fell to a near two-week low on Wednesday after the U.S. Federal Reserve raised interest rates by 75 basis points for the third time to tame inflation and signalled that borrowing costs would keep rising this year.
But while the Fed struck a hawkish tone on Wednesday, some analysts said the fact that the rate hike was not bigger provided some relief to oil markets.
“The Fed delivered the third 75bp hike yesterday, as expected. Markets cheered the decision, as a 75bp hike is better than a 100bp hike,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank in a note.
Meanwhile, there were concerns that Russian President Vladimir Putin’s move to call up 300,000 reservists, marking an escalation of the war in the Ukraine, could further hurt supply, analysts from Haitong Futures said.
Some Chinese refineries are considering increasing runs in October, eyeing stronger demand and a potential reversal of Beijing’s fuel export policy, which could boost crude oil demand.
But oil prices remain under selling pressure due to inventory stock builds and a worsening economic outlook, said Citi analysts in a note.
U.S. crude inventories rose by 1.1 million barrels in the week to Sept. 16 to 430.8 million barrels, smaller than analysts’ expectations in a Reuters poll for a 2.2 million-barrel rise.
The soaring dollar also put a lid on oil price gains as it is making crude more expensive for many buyers. The dollar index touched a 20-year high against a basket of other currencies on Wednesday.
Elsewhere, Germany nationalised gas importer Uniper on Wednesday and Britain said it would halve energy bills for businesses in response to a deepening supply crisis that has exposed Europe’s reliance on Russian fuel.