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Oil creeps back up after three days of losses

Friday, 24 May 2024 | 00:00

Oil prices crept up on Thursday, clawing back some of the previous three days’ losses despite the U.S. Federal Reserve entertaining a further tightening of interest rates if inflation remains sticky, a move that could hurt oil demand.

Brent crude futures were up 92 cents, or 1.1%, at $82.82 a barrel by 1317 GMT. U.S. West Texas Intermediate crude (WTI) futures were 97 cents, or 1.3%, higher at $78.54. Both benchmarks fell more than 1% on Wednesday for their third straight day of losses.

Minutes released on Wednesday from the Federal Reserve’s most recent policy meeting showed the U.S. central bank discussed the potential to raise interest rates in the face of continued stubborn inflation.

“Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate,” the Fed minutes 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, U.S. crude stocks rose by 1.8 million barrels last week, according to the Energy Information Administration, compared with an estimated draw of 2.5 million barrels.

Supply curbs and buoyant demand could support prices in the longer term, however.

“As we continue to see the oil market as undersupplied, we target Brent crude oil rising to $91 a barrel over the coming months … supported by healthy demand and OPEC+ countries’ efforts to keep the oil market in balance,” said UBS analyst Giovanni Staunovo.

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.

OPEC+, which groups together OPEC and allies led by Russia, will meet on June 1 to decide on production cut levels.
Source: Reuters (Reporting by Paul Carsten and Noah Browning in London Additional reporting by Arathy Somasekhar and Sudarshan Varadhan Editing by David Goodman, Kirsten Donovan)

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