Oil prices fall after US rate hike, but tight supply still in focus

By Shadia Nasralla

LONDON (Reuters) -Oil prices erased early features to move decrease on Thursday, a day after a fall triggered by a U.S. curiosity rate hike, although tight supply restricted losses.

Brent crude futures had been down 45 cents, or 0.4%, to $118.06 a barrel by 0906 GMT whereas U.S. West Texas Intermediate (WTI) crude futures fell 44 cents to $114.87, additionally off 0.4%.

Both contracts broadly stayed inside the earlier session’s vary.

Prices slipped greater than 2% in a single day after the Federal Reserve raised its key curiosity rate by 0.75%, the most important hike since 1994.

The greenback index retreated from a 20-year excessive, easing downward stress on oil prices. A stronger dollar makes U.S. dollar-priced oil costlier for holders of different currencies, curbing demand.

Investors remained centered on tight provides as Western sanctions restricted entry to Russian oil.

In Libya, oil output has collapsed to 100,000-150,000 barrels per day (bpd), a spokesman for the oil ministry mentioned on Tuesday, a fraction of the 1.2 million bpd seen final yr.

That is hitting already tight supply whereas the International Energy Agency mentioned it expects demand to rise additional in 2023, rising by greater than 2% to a report 101.6 million bpd.

Optimism that China’s oil demand will rebound because it eases COVID-19 restrictions can be supporting the worth outlook.

“Looking into subsequent yr, there’s a clear deficit in supply. While a recession might but come alongside to alter this, the present set-up stays bullish for the oil value and oil shares,” Bernstein analysts mentioned in a notice.

U.S. crude shares and distillate inventories rose whereas gasoline inventories fell in the week by means of June 10, the Energy Information Administration mentioned. [EIA/S]

Still, Bernstein estimated world stock ranges at 48 days of demand cowl, beneath the long-term common of 55 days.

(Additional reporting by Florence Tan in Singapore and Sonali Paul in Melbourne; enhancing by Jason Neely)

(Only the headline and film of this report might have been reworked by the Business Standard employees; the remainder of the content material is auto-generated from a syndicated feed.)

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