Oil prices dipped slightly on Thursday in up-and-down trade, pressured by rising U.S. crude and fuel supplies and expectations of slow Federal Reserve rate cuts but supported by U.S. economic data showing an easing labor market and slowing inflation.
Brent crude futures fell 18 cents, or 0.2%, to $82.42 a barrel by 11:12 a.m. EDT (1512 GMT). West Texas Intermediate (WTI) U.S. crude futures were down 24 cents, or 0.3%, to $78.26. Both benchmarks had gained nearly 1% in the previous session.
The U.S. Labor Department said the producer price index (PPI) for final demand dropped 0.2% last month. Economists polled by Reuters had forecast a 0.1% increase. Separate data showed weekly initial jobless claims exceeded estimates for a 10-month high.
On Wednesday, the Fed held interest rates steady on and pushed out the start of policy easing to as late as December.
“Yesterday’s post-meeting comments by the Fed chair implying no definitive time frame for a rate reduction appeared to place additional pressure on the energy complex,” said Jim Ritterbusch of Ritterbusch and Associates.
Higher borrowing costs tend to dampen economic growth and can limit oil demand.
In a press conference after the U.S. central bank’s two-day policy meeting, Fed Chair Jerome Powell said inflation had fallen without a major blow to the economy.
On the supply side, U.S. crude stockpiles rose more than expected last week, driven largely by a jump in imports, while fuel inventories also increased more than expected, data from the Energy Information Administration showed on Wednesday.
A bearish report by the International Energy Agency, which warned of excess supply in the near future, also weighed on prices.
Oil traders are also watching continuing talks over a potential ceasefire in Gaza, which could ease fears of oil supply disruptions in the region.
In the latest attack on shipping, Iran-allied Houthi militants on Wednesday took responsibility for an attack by small craft and missiles that left a Greek-owned coal carrier in need of rescue near Yemen’s Red Sea port of Hodeidah.
The militant group has attacked international shipping in the Red Sea region since November in solidarity with the Palestinians in the war between Israel and Hamas.
U.S. Secretary of State Antony Blinken said Hamas had proposed numerous changes to a U.S.-backed proposal for a ceasefire, adding that mediators were determined to close gaps in the negotiations.
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Published: 13 Jun 2024, 10:45 PM IST