March 16 (UPI) -- Crude oil prices continued to inch back Thursday toward its narrow band for the year to rally after a U.S. rate hike and signs of easing supply-side strains.
The U.S. Federal Reserve raised its short-term rate by a quarter-percentage point Wednesday, making the value of the U.S. dollar weaker and the commodities traded in that currency subsequently more expensive.
The PRICE Futures Group, a trader in Chicago, said in a morning daily newsletter it was time to "get ready to roll" on higher crude oil prices given the sentiments of U.S. economic strength expressed by the U.S. Federal Reserve.
Negative market headwinds may emerge from a budget plan from U.S. President Donald Trump that cuts programs for all federal agencies outside of Veterans Affairs, Homeland Security and the Defense Department.
The United States is a lead oil consumer and the world's leading economy and momentum there has a spill-over effect on the broader market. The price for Brent crude oil was up 0.2 percent about a half hour before the start of trading in New York to $51.86 per barrel. West Texas Intermediate, the U.S. benchmark for crude oil prices, gained 0.12 percent over the previous day's close to trade at $48.96 per barrel.
Oil prices were steady around $55 per barrel for most of the year until rising U.S. oil production and crude oil inventory levels surged last week, triggering a 5 percent one-day decline in prices.
Adding positive pressure to crude oil prices was Wednesday's report from the U.S. Energy Information Administration that U.S. crude oil inventories declined last week by 237,000 barrels for the first time this year. The main driver behind the decline in inventories was a decline in crude oil imports. U.S. crude oil production, meanwhile, continued to stand on solid ground, topping 9.1 million barrels per day last week.
Members of the Organization of Petroleum Exporting Countries are some of the top exporters to the United States and managed production declines from OPEC could influence U.S. crude oil inventory levels with a lag effect given transit times from overseas.
Anthony Starkey, a manager for energy analysis at Platts Analytics, said in a recent newsletter that investors may be reading too much into EIA data.
"Record high crude oil inventories along the U.S. Gulf Coast and Houston Ship Channel closures due to fog have created congestion in the area," he said. "These issues may have impacted the imports of crude last week more than anything else."
Broader markets may be reacting Thursday to weekly figures on first-time claims for unemployment from the U.S. Labor Department, which would back U.S. Federal Reserve statements that labor was part of the economic recovery.
For the week ending March 11, the Labor Department reported seasonally-adjusted claims of 241,000, a decline of 2,000 from the previous week. The less-volatile four-week moving average, however, gained 750 from the previous week.