Oil prices rose on Wednesday, as cooling U.S. inflation data fueled expectations the Federal Reserve was nearing the end of its rate hike cycle and eased the impact of a small build in U.S. crude inventories.
The CPI data somewhat suggests that the Fed will start cutting interest rates towards the end of the year. The impact on energy demand is positive,” said Robert Yawger, director of energy futures at Mizuho Securities.
A weaker dollar following the data also made dollar-denominated oil cheaper for buyers holding other currencies.
Dennis Kissler, senior vice president of trading at BOK Financial, said hedge funds had bought oil futures in the market over the past few days in anticipation of improving demand.