Nov. 28 (UPI) -- Crude oil prices were lower early Wednesday after being near flat in the previous session, with traders' attention focused not just on the release of inventory data by the EIA, but also news on interest rates.
West Texas Intermediate, or WTI, front-month crude oil prices were 1.2 percent lower at $50.92 just before 10:00 a.m. EST while Brent front-month futures traded at $59.68, or 1.2 percent lower at the same time.
"This market is still a bear and continues to show signs clawing it's way lower, yet still," John Thorpe, a commodity broker at Los Angeles-based Cannon Trading, told UPI.
"Jerome Powell speaks at 12 noon EST at the Economic Club of New York. His outlook for rates will necessarily have a domino effect on crude prices," he added.
An increase in U.S. interest rates would make the dollar stronger compared with other currencies. Since most oil transactions worldwide, as well as futures, are in U.S. dollars, a strengthening of the greenback would make oil more expensive, and potentially affect demand worldwide.
In addition, there are renewed worries regarding the possibility of trade disputes between the world's two biggest economies possibly worsening and contributing to a potential economic slowdown, which would also affect crude oil demand.
"[U.S. President Donald] Trump added to fears over weakening demand, saying in a Wall Street Journal interview that he'll likely go ahead with plans to increase tariffs on $200bn of Chinese goods if negotiations with Chinese leader Xi Jinping fail to produce a trade deal," according to a report sent to UPI by Jack Allardyce, an oil and gas analyst at Cantor Fitzgerald.
"All eyes are on the meeting of the leaders at the G20 in Argentina at the end of the week," he added.
The meeting will provide an opportunity for Chinese and U.S. leaders to potentially advance on trade issues. In addition, oil producing nations could reach accords to reduce oil production, particularly Saudi Arabia and Russian leaders. Russia and Saudi Arabia are two of the three biggest crude oil producers in the world, along with the United States.
There is a widespread expectation among traders that producing nations will announce over 1 million in production cuts by Dec. 6, when the OPEC oil cartel will meet in Vienna.
The American Petroleum Institute reported a build of 3.5 million barrels after the closing of the Tuesday session, the Cantor Fitzgerald report said. The EIA will release official inventory figures at 10:30 a.m. EST.