(Feb 2): Oil prices rebounded on Thursday (Feb 2) after tumbling in the previous session as a weaker US dollar brought back some appetite for risk assets and the OPEC+ decision to roll over an output cut helped ease oversupply concerns.
Brent crude futures rose 65 cents, or 0.8%, at US$83.49 a barrel as of 0353 GMT, while West Texas Intermediate (WTI) US crude futures advanced 71 cents, or 0.9%, to US$77.12 a barrel.
Both benchmarks plunged more than 3% overnight after US government data showed big builds in crude and oil products inventory.
The Federal Reserve raised its target interest rate by a quarter of a percentage point on Wednesday, yet continued to promise "ongoing increases" in borrowing costs as part of its ongoing battle against inflation.
"Those hawkish reaffirmations from the Fed were met with rising doubts from the markets, which saw a dovish takeaway from Jerome Powell's acknowledgement of progress in the 'disinflationary process' and that he is not worried about loosening financial conditions," said Yeap Jun Rong, Market Analyst at IG, in a note.
"Inflation has eased somewhat but remains elevated," the US central bank said in a statement that marked an explicit acknowledgement of the progress made in lowering the pace of price increases from the 40-year highs hit last year.
The US dollar index dived to a fresh nine-month low on Thursday in reaction to the softer rate hike bets. A weaker greenback makes dollar-priced oil less expensive for holders of other currencies, boosting demand.
An OPEC+ panel endorsed the oil producer group's current output policy at a meeting on Wednesday, leaving production cuts agreed last year in place amid hopes of higher Chinese demand and uncertain prospects for Russian supply.
OPEC+ agreed to cut its production target by two million barrels per day (bpd), about 2% of world demand, from November last year until the end of 2023 to support the market.
Prices are also rising in the backdrop of a Feb 5 ban on Russian refined products by the European Union.
EU countries will seek a deal on Friday on a European Commission proposal to set price caps on Russian oil products, after postponing a decision on Wednesday amid divisions between member states, diplomats said.
The European Commission proposed last week that from Feb 5 the EU apply a price cap of US$100 per barrel on premium Russian oil products such as diesel and a US$45 cap per barrel on discounted products such as fuel oil.