Oil jumps 2% as supply woes offset demand fears after rate hike

Oil posted its biggest gain in over a week in choppy trade as traders weighed the prospect of more rate hikes against persistently tight supplies.

West Texas Intermediate futures closed above US$117 a barrel after rebounding from a session low of US$112.31. Brent ended just under US$120. This week, the Federal Reserve raised interest rates 75 basis points as it sought to combat surging inflation. The US central bank signaled a willingness to accept a recession and a rise in unemployment in its resolve to contain elevated inflation.

“There is a churn to the market, today,” said John Kilduff, a partner at hedge fund Again Capital in New York. “The continued supply concerns remain supportive, but the economic data are moves by the Fed and other central banks is holding back further gains.”