Stubborn inflation keeps US rate hike on agenda
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US manufacturers report surge in input costs
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Hopes of improving US fuel demand support oil market
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OPEC to meet on June 1
By Shariq Khan
NEW YORK, – Oil prices fell about 1% on Thursday to their lowest level since February, sliding for a fourth consecutive session as the prospect of higher-for-longer U.S. interest rates raised worries around demand growth in the world’s biggest oil market.
Brent crude futures fell by 76 cents, or 0.9%, to $81.14 a barrel by 1:35 p.m. EDT . U.S. West Texas Intermediate crude futures were down 88 cents, or 1.1%, to $76.69 a barrel. Both contracts hit their lowest levels in around three months.
S&P Global data showed accelerating U.S. business activity this month, but manufacturers also reported a surge in prices for a range of inputs, suggesting a pickup in goods inflation in the months ahead.
On Wednesday minutes from the U.S. Federal Reserve’s latest policy meeting showed policymakers remain doubtful if current interest rates are high enough to tame stubborn inflation.
High interest rates increase the cost of borrowing, which can slow down economic activity and dampen demand for oil.
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.
However, the EIA reported U.S. gasoline demand at its highest since November, providing some support for energy markets ahead of the Memorial Day holiday weekend, which is considered the start of the U.S. summer driving season. U.S. gasoline consumption makes up around 9% of global oil demand.
“It was a pretty good report for gasoline, everything pretty much hit the positive side of the ledger,” Mizuho analyst Bob Yawger said. “However, one report does not make a trend, so everyone will be watching if it can continue to perform going forward.”
Investors are also looking ahead to the June 1 meeting of the Organization of Petroleum Exporting Countries and its allies, together called OPEC , where the group will decide its output policy.
Russia said it exceeded its OPEC production quota in April for “technical reasons” and will soon present to the OPEC Secretariat its plan to compensate for the error, the Russian Energy Ministry said late on Wednesday.
This article was generated from an automated news agency feed without modifications to text.
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Published: 23 May 2024, 11:38 PM IST