Oil falls slightly as rate hikes counter decrease in US fuel stock
However, an EOG Resources official says prices could rise as muted increases in US oil production and cuts by Opec+ producers will limit supply
London — Oil futures dipped slightly on Thursday, with trader expectations of further interest-rate hikes countered by potentially bullish US oil inventory data after preliminary figures showed a fall in stocks.
Brent futures eased by 47c, or 0.6%, to $76.65 a barrel at 8.40am GMT and US West Texas Intermediate (WTI) crude futures were down 44c, or 0.6%, at $72.09.
The benchmarks had firmed in the previous session as US maize and soybean prices raced to multi-month highs, raising expectations that crop shortfalls could lower biofuels blending and increase oil demand.
However, the market was cautious after US Federal Reserve chair Jerome Powell said two more interest-rate hikes of 25 basis points each by the end of 2023 were “a pretty good guess”.
The Bank of England is expected to raise rates for a 13th time this morning in the face of stubbornly strong inflation. Higher interest rates could slow economic growth and reduce oil demand.
Oil prices held on to most of the previous session's gains as the market kept a lookout for fresh drivers, such as official US oil inventory data due at 4.30pm SA time and Chinese factory activity data due next week.
In a preliminary indicator, industry data showed US crude oil inventories fell by about 1.2-million barrels last week, defying forecasts for a build of 300,000 barrels.
Meanwhile, an executive at US shale producer EOG Resources said oil prices could rise as muted increases in US oil production and cuts by Opec+ producers will limit supply in the months ahead.
“With demand seasonally rising over the coming months, we expect larger oil inventory declines to become visible and support oil prices,” UBS strategist Giovanni Staunovo said.
Reuters