WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange along with Brent crude traded on the Intercontinental Exchange advanced in early trade Wednesday, lifting West Texas Intermediate above $73 per barrel (bbl) after American Petroleum Institute data showed U.S. crude oil inventories declined larger-than-expected during the week-ended June 18, while U.S. Dollar Index softened on the back of comments from Federal Reserve Chairman Powell before a special House committee where he gave a rather dovish stance on monetary policy.
Appearing before the House Select Subcommittee on the Coronavirus Crisis on Tuesday, Powell insisted that the recent surge in consumer prices is closely tied to factors related to the economic reopening that should "resolve themselves" over time. Among them, Powell cited airline tickets and lumber prices along with generally surging consumer demand.
"They don't speak to a broadly tight economy and to the kinds of things that have led to higher inflation over time," he added.
Fed's chief, however, acknowledged that some inflation pressures are stronger and more persistent than he had anticipated, though still not on par with 1970s-style inflation.
"I will say that these effects have been larger than we expected, and they may turn out to be more persistent than we have expected," he added. "But the incoming data are very consistent with the view that these are factors that will wane over time, and inflation will then move down toward our goals and we'll be monitoring that carefully."
Consumer price index surged 5% year over year in May, the highest in nearly 13 years amid a jump in used car prices and a slew of other goods that have seen surging demand as quarantine restrictions eased.
The latest update on the Fed's preferred inflation metric -- the core personal consumption expenditures price index -- will be released Friday.
Separately, API late Tuesday reported U.S. crude oil inventories dropped 7.199 million bbl during the week-ended June 18, well above calls for a 4.1 million bbl draw, while stocks at the Cushing, Oklahoma storage hub slid 2.550 million bbl. Gasoline stockpiles climbed 959,000 bbl last week, above estimates for an 800,000 bbl build, while distillate inventories gained a more-than-expected 992,000 bbl, with the market anticipating an increase of 600,000 bbl.
Traders now await official supply data from the U.S. Energy Information Administration due out 10:30 a.m. ET.
Near 7:30 AM ET, NYMEX August WTI contract gained $0.55 to $73.40 bbl and ICE August Brent crude advanced $0.62 to above $75 bbl at $75.41 bbl. NYMEX July RBOB futures surged 1.93 cents to $2.2436 gallon, and July ULSD futures rallied 1.77 cents to $2.1687 gallon.
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