Brent recovers lost ground amid lower-than-estimated US crude stock build

Front-month ICE Brent has come up by $1.59/bbl on the day, to $76.53/bbl at 09.00 GMT.

PHOTO: Federal Reserve building in Washington D.C. Getty Images

Upward pressure:

The US Federal Reserve raised its key interest rate by 25 basis points at its policy meeting yesterday. The rate hike was in line with market expectations. Fed Chair Jerome Powell indicated that the committee did consider pausing rate hikes as a result of the recent banking turmoil, CMC Markets analyst Tina Teng said.

Commercial US crude inventories grew by 1.12 million bbls on the week, to a two-year high of 481.18 million bbls on 17 March, according to the US Energy Information Administration (EIA) figures released yesterday. The weekly stock build was smaller than the 3.26 million-bbl build estimated by the American Petroleum Institute (API) earlier this week.

Downward pressure:

During the Fed policy meeting, economic risks in light of the recent banking turmoil were flagged. This has reignited fears of a potential global financial crisis and recession, which would also hurt oil demand and cause further drops in Brent's price.

The Fed still maintains that “the US banking system is sound and resilient.” But the central bank simultaneously cautioned that recent banking turmoil could lead to tighter credit conditions for US households and businesses, which could weigh on economic activity, hiring and inflation.

By Nithin Chandran

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