Oil prices were flat early on Wednesday as Fed Chair Jerome Powell is set to brief Congress on the U.S. economy today and tomorrow.

As of 7:57 a.m. ET on Wednesday, the U.S. benchmark, WTI Crude, was up 0.01% at $71.16, and the international benchmark, Brent Crude, traded at $75.83, slightly down by 0.04% on the day.

Prices have been seesawing today as the market expects Powell to give a detailed rationale of last week’s Fed decision to hold interest rates unchanged after 10 consecutive Fed meetings that ended with rate hikes.

Powell’s comments on the U.S. economy will be closely watched by the market on Wednesday afternoon and on Thursday for clues about the chances of the U.S. managing a soft landing after the recent rate hikes.

In Europe, inflation in the UK continues to be high, with May inflation stuck at an annual 8.7%, flat compared to April and higher than expectations. The lack of easing of the consumer price pressure could give the Bank of England more reasons to raise the key UK interest rate again when it meets on Thursday.

“Countries are struggling to rein in inflation – the UK this morning a prime example of that – and that’s going to dampen growth and threaten recessions across the globe,” Craig Erlam, senior market analyst at OANDA said today.

“There are so many moving parts at this stage but at this point in time, there’s more negative than positive as far as the crude price is concerned,” Erlam added.

Observed higher supply from Iran is undermining the Saudi efforts “to desperately manipulate prices higher with production cuts,” the analyst also noted.

China’s much-awaited economic stimulus has also been underwhelming, further weighing on oil prices and the prospects of oil demand, analysts say.

“China’s demand outlook is crucial for the global market, given that the bulk of global demand growth this year is expected to be driven by China. Significantly weaker Chinese demand would also mean that the global oil balance would not be as tight as currently expected over the second half of 2023,” ING strategists Warren Patterson and Ewa Manthey said on Wednesday.

By Tsvetana Paraskova for Oilprice.com

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