Oil stabilizes after falling US inventories dispel interest rate concerns

Oil prices were steady in early Asian trading on Wednesday, as industry data showed a drawdown in US crude inventories after the market fell in the previous session on fears that further sharp increases in US interest rates could hurt demand.

Brent crude futures for April were up 8 cents at $83.37 a barrel by 0120 GMT. US West Texas Intermediate crude futures lost four cents, to $77.54 a barrel.

In support of the market on Wednesday, data from the American Petroleum Institute showed that US crude inventories fell by about 3.8 million barrels in the week ending March 3, according to market sources.

The drop contrasted with the expectations of nine analysts polled by Reuters on a 400,000-barrel increase in crude stocks.

Gasoline stocks increased by about 1.8 million barrels, while distillate stocks increased by about 1.9 million barrels, according to the sources, who asked not to be identified.

Both Brent and West Texas Intermediate fell more than 3 percent on Tuesday after US Federal Reserve Chairman Jerome Powell said the central bank would likely need to raise interest rates more than expected in response to the recent strong data.

Powell’s comments pushed the dollar, which usually goes against oil, to a three-month high against a basket of currencies.