Crude oil prices rallied and sought to recover from two-week lows. As of this news writing in Wednesday morning's trading session (01/February), Brent oil was up by 0.32 percent at $85.71 a barrel.

Meanwhile, WTI (West Texas Intermediate) oil prices were up by 0.28 percent at $79.22 a barrel. Oil prices turned higher after an EIA (Energy Information Administration) gave it’s report. 

The report said that demand for United states oil products rose by 178,000 bph to 20.59 million bph. This level is the highest one since last August. 

In addition, the weakening of the Dollar also played a role in the current rise in oil prices. Oil benchmarks were supported by a weakening dollar. 

OPEC Meeting Comes into Focus

This is because the price of oil pegged to the Dollar becomes cheaper for foreign currency holders so that demand will further increase. That was said by UBS analyst Giovanni Staunovo. 

A Reuters survey revealed that 49 economists and analysts are optimistic that Brent oil prices will reach an average of $90 per barrel this year. The figure was revised up from previous projections in October.

It was given China's economic recovery that has the potential to boost the demand outlook. Rate Hike is always awaited by people during their trading activity. 

Furthermore, OPEC will hold a meeting that is expected to sustain production policy. In any case, OPEC is likely to continue to monitor the dynamics of the world energy market.

The Fed’s Hawkish Announcement may Support USD

The thing above was including with regard to the demand outlook and the movement of the US Dollar. The market's attention at this time is also on the Fed's interest rate and policy announcements.

Based on schedule, that will be announced in the early hours of tomorrow. Investors expect the U.S. central bank to hike 25 bps or lower than previous rate hikes. 

A more hawkish announcement and outlook from the Fed Chairman will support the strengthening of the Dollar. This situation was also negatively impacting the oil prices. 

Before, WTI crude oil prices stabilized around $79 per barrel ahead of the Federal Reserve's policy announcement. It was as well as OPEC's production policy. 

Dovish Statements is Another Possibility

In its latest meeting, the Fed is predicted to slow the pace of rate hikes to 25 bps as the US inflation rate eases. In addition, that organization is also predicted to give a statement that tends to be more dovish.

On the supply side, OPEC+ is predicted to maintain its current oil production levels. However, the organization is also likely to pay close attention to the impact of China's COVID-19 policy easing.

Besides that, the latest sanctions on Russian oil supplies also becomes one of the reasons which needs to consider. Elsewhere, The U.S. Dollar hit its highest level in a week on Tuesday.

It was as markets around the world scaled back their risk appetite ahead of several major central bank meetings. That becomes a concern owned by some participants too. 

Market is now more Optimistic 

The dollar index rose at 102.06, having previously hit a high of 102.19. The market had an optimistic start to the year, pushing the dollar down and higher yields up.

That was as investors looked at the current high inflation rate around the world to focus on the prospect of a possible rate cut later this year.

German retail sales data for December was much weaker than expected. It was down by -5.3% in the month in real terms, and explains why GDP in Europe's largest economy fell 0.2% in the last quarter of the year.

Lbs NVFrench consumer spending also fell 1.3% in the month, further illustrating the pressure on European consumers, although the French economy as a whole rose by 0.1% in the quarter.