Oil steady after a surprising drop in U.S. crude stocks balances demand fears. Oil prices held onto most of the previous day’s gains in early trade on Thursday as markets evaluated an unexpected drop in U.S. crude oil supplies against the likelihood of weaker demand after the Federal Reserve chairman hinted at further interest rate hikes.
At 0015 GMT, Brent futures fell 8 cents, or 0.1%, to $77.04 a barrel, while WTI futures were down 5 cents, or 0.1%, to $72.48.
The benchmarks gained a dollar a barrel in the previous session as U.S. corn and soybean prices rose to multi-month highs, stoking worries that crop shortages worldwide could cut biofuel blending and increase oil demand.
In the week ending June 16, U.S. crude oil stockpiles declined by 1.2 million barrels, surprising analysts’ expectations for a 300,000-barrel rise.
The U.S. Energy Information Administration will release inventory figures Thursday. The Juneteenth holiday delayed the report.
In congressional testimony, Fed Chair Jerome Powell reiterated the central bank’s goal of containing inflation and said two more 25-basis point rate hikes by year-end was “a pretty good guess.”
Higher interest rates raise consumer borrowing costs, slowing economic development and oil demand.
Powell’s remarks lifted the dollar against a basket of currencies. Oil demand decreases when a stronger dollar raises prices for foreign purchasers.
On Wednesday, an official at U.S. shale producer EOG Resources (EOG.N) said that subdued gains in U.S. oil output and OPEC+ curbs would limit crude supply, raising oil prices.
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