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Oil prices fall for fourth straight day as US rate hike prospects emerge

Tan KW
Publish date: Thu, 23 May 2024, 02:33 PM
Tan KW
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Oil prices eased for a fourth straight session on Thursday after the minutes of a US Federal Reserve meeting revealed discussions of a further tightening of interest rates if inflation remained sticky, a move that could hurt oil demand.

Brent crude futures fell 46 cents, or 0.6%, to US$81.44 a barrel at 0424 GMT. US West Texas Intermediate crude (WTI) futures were down 54 cents, or 0.7%, at US$77.03. Both benchmarks fell more than 1% on Wednesday.

Minutes released on Wednesday from the Federal Reserve's last policy meeting showed the US central bank's response to sticky inflation would "involve maintaining" its policy rate for now but also reflected discussion of possible further hikes.

"Various participants mentioned a willingness to tighten policy further should risks to inflation materialise in a way that such an action became appropriate," minutes of the Fed's meeting said.

Higher interest rates boost borrowing costs, crunching funds that could boost economic growth and oil demand in the world's largest oil consuming nation.

Also weighing on the market, US crude stocks rose by 1.8 million barrels last week, according to the Energy Information Administration, compared with an estimate for a 2.5 million-barrel draw.

Globally, physical crude markets have more recently been pressured by soft refinery demand and ample supply.

"Recent market softness has come on the back of weaker data, including rising oil inventories, tepid demand, and refinery margin weakness and the increasing risk of run cuts," Citi analysts said in a note on Thursday.

Russia said it exceeded its Opec+ production quota in April for "technical reasons" and will soon present to the Organization of the Petroleum Exporting Countries (Opec) Secretariat its plan to compensate for the error, the Russian Energy Ministry said late on Wednesday.

Citi said it still expects that Opec+, which groups together Opec and allies led by Russia, will hold its production cuts through the third quarter of this year when it meets on June 1.

Citi also said it continues to see Brent averaging US$86 a barrel in the second quarter of 2024.

 


  - Reuters

 

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