Oil prices edge higher as markets focus on supply tightness

Brent crude oil price news: Oil prices ticked up in early trade on Wednesday, as markets focused on supply tightness heading into winter and a "soft landing" for the US economy. Brent crude futures rose 33 cents, or 0.4 per cent, to $94.29 a barrel by 0015 GMT, while US West Texas Intermediate crude futures climbed 31 cents, or 0.3 per cent, to $90.70. Industry data released on Tuesday showed US crude oil stockpiles rose last week by about 1.6 million barrels, against analysts' expectations for a drop of about 300,000 barrels.

However, markets continued to worry about US crude stockpiles at the key Cushing, Oklahoma, storage hub falling below minimum operating levels. Further drawdowns at Cushing, the delivery point for US crude futures, could also provide new upward pressure on oil markets as it would compound supply tightness stemming from supply cuts by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+.

US government data on oil inventories is expected at 10:30 a.m. (1430 GMT). While some analysts expect refineries' seasonal autumn maintenance will help build crude stocks a bit, others worry that high export demand could draw barrels away. On the demand side, while Russia softened its gasoline and diesel export ban this week, ban on exports of high-quality diesel and gasoline remains in place. Exports of products already accepted by Russian Railways and Transneft can go ahead, while higher-sulphur gasoil and fuel used for bunkering will be exempt from the ban.

Meanwhile, a "soft landing" for the US economy is more likely than not, Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday, but there is also a 40 per cent chance that the Fed will need to raise interest rates "meaningfully" to beat inflation. Kashkari pegged the probability at about 60 per cent that the Fed "potentially" raises rates one more quarter of a percentage point and then holds borrowing costs steady "long enough to bring inflation back to target in a reasonable period of time."

The Bank of England has concluded its tightening cycle and will likely keep the Bank Rate at 5.25 per cent until at least July, a Reuters poll of economists showed, although a significant minority said it would hike rates again this year. Higher interest rates increase borrowing costs, which could slow economic growth and reduce oil demand.

The US Senate also took a step forward on a bipartisan bill meant to stop the government from shutting down in just five days, while the House sought to push ahead with a conflicting measure backed only by Republicans.