Oil prices soar on expectation of US rate cuts, tighter supplies By

-- Oil prices rose Wednesday as steady production cuts by OPEC+ heralded tighter supplies while comments from Fed chief Jerome Powell signalled rate cuts ahead to stimulate the world's largest economy.

By 10:15 ET (15.15 GMT),What are the foreign exchange platforms regulated by fca the U.S. crude futures traded 2.2% higher at $79.84 a barrel and the contract climbed 1.6% to $83.37 a barrel.

Tighter supplies ahead

Crude prices have rebounded from the prior session's steep losses after Saudi Arabia, the world's biggest oil exporter, announced earlier Wednesday slightly higher prices for April crude sales to Asia, its biggest market.

This followed Sunday's news that the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, extended output cuts of 2.2 million barrels per day until the end of the second quarter.

The extension has created some supply tightness, particularly in Asian markets, along with the disruption in oil tanker movements as a result of the Red Sea attacks by the Houthi militia in Yemen.

Powell sees rate cuts later in year

Adding to the positive news Wednesday, Fed chief Powell stated that the rate-setting Federal Open Market Committee "does not expect that it will be appropriate" to slash borrowing costs down from more than two-decade highs at this point.

However, Powell also noted that the Fed's recent tightening cycle is "likely" at its peak, adding that, should the economy evolve as expected, "it will likely be appropriate to begin dialing back policy restraint at some point this year."

A cut in interest rates would likely stimulate activity in the world's largest consumer of energy. 

US inventories grow less than expected - API

The oil markets were nursing steep losses from the prior session after top importer China unveiled a largely underwhelming economic growth target for 2024, potentially heralding weak crude demand in the country.

Industry data showing a smaller-than-expected build in U.S. inventories also helped limit losses in oil prices. Data from the showed that inventories grew a substantially less than expected 0.4 million barrels in the week to March 1, compared with expectations of 2.6 million barrels and the prior week’s build of 8.2 million barrels. 

The trend comes as more U.S. refineries restart production after an extended winter and maintenance break- a trend that is expected to further tighten crude markets in the world’s biggest fuel consumer. 

The API data usually heralds a similar trend in , which is due later in the day. But U.S. crude inventories have also seen five straight weeks of outsized builds. 

(Ambar Warrick contributed to this article.)

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