Oil prices recovered on Wednesday, wiping off some of the sharp losses on Tuesday, as U.S. stockpiles fell last week and Federal Reserves announced an interest rates hike for the fourth time this year.
U.S. crude inventories dropped by 0.5 million barrels from the week ending Dec. 14, marking the third weekly drop in a row, according to a weekly report released by the U.S. Energy Information Administration on Wednesday.
Crude futures pared gains after the U.S. central bank raised the federal funds rate target to a range of 2.25 percent to 2.5 percent, higher than its November statement of 2-2.25 percent range, incurring a dramatic sell-off in stocks due to concerns over a slower economic growth.
The widely-expected rate hikes strengthened the U.S. dollar, as the Fed tightened the flow of the greenback through the market, making oil more expensive as it is traded in dollars.
To boost market confidence, Saudi Arabia's Energy Minister Khalid al-Falih told reporters in Riyadh on Wednesday that supply-and-demand balance would be achieved in 2019, adding that global oil stockpiles are set to decline by the end of the first quarter next year.
He noted that implications beyond the supply and demand sides have also affected oil prices, including U.S. interest rates, the strength of the greenback, global trade tensions and geopolitical issues such as U.S. sanctions against Iran.
The West Texas Intermediate for January delivery rose 0.96 U.S. dollar to settle at 47.2 dollars a barrel on the New York Mercantile Exchange, while Brent crude for February delivery jumped up 0.98 dollar to close at 57.24 dollars a barrel on the London ICE Futures Exchange.
Editor:Cherie
