June 13 2024: Oil prices declined on Thursday as investors absorbed the news that the U.S. Federal Reserve likely postponed an interest rate cut to December, and as U.S. crude and fuel stockpiles increased.
Brent crude futures fell by 60 cents, or 0.7%, to $82 a barrel by 1207 GMT. West Texas Intermediate (WTI) U.S. crude futures dropped 68 cents, or 0.9%, to $77.82. Both benchmarks had risen nearly 1% in the previous session.
The Fed held rates steady on Wednesday and indicated that policy easing might not start until December.
“In the Fed’s view, this is the price that needs to be paid to achieve a soft landing and avoid recession beyond doubt,” said PVM Oil analyst Tamas Varga.
Higher borrowing costs generally dampen economic growth and can, in turn, limit oil demand.
Fed Chair Jerome Powell, in a press conference after the U.S. central bank’s two-day policy meeting, stated that inflation had decreased without significantly harming the economy and that there was no reason to think this trend could not continue.
On the supply side, U.S. crude stockpiles rose more than expected last week, largely due to a surge in imports, while fuel inventories also increased more than anticipated, according to data from the Energy Information Administration on Wednesday.
Adding to the downward pressure on prices was a bearish report by the International Energy Agency, which warned of an impending excess supply.
Traders are also monitoring ongoing ceasefire talks in Gaza, which, if resolved, would alleviate concerns about potential oil supply disruptions from the region.
In the latest incident affecting shipping, Iran-allied Houthi militants on Wednesday claimed responsibility for an attack by small craft and missiles on a Greek-owned coal carrier near Yemen’s Red Sea port of Hodeidah.
The militant group has targeted international shipping in the Red Sea region since November in solidarity with Palestinians in the conflict between Israel and Hamas.
U.S. Secretary of State Antony Blinken stated that Hamas had proposed numerous changes to a U.S.-backed ceasefire proposal, adding that mediators were determined to close gaps in the negotiations.
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