Oil prices steady on U.S. Fed comments

by Jonathan Adams
investing in oil gas

Brent crude futures gained 5 cents to $81.41 a barrel, while U.S. WTI crude futures were 2 cents higher at $76.89

Oil prices were steady on Friday as investors considered the latest comments from the U.S. Fed on interest rates amid sticky inflation, while signs of firming seasonal U.S. fuel demand lent support.

Brent crude futures gained 5 cents to $81.41 a barrel by 0640 GMT, while U.S. West Texas Intermediate (WTI) crude futures were 2 cents higher at $76.89.

Both benchmarks settled at multi-month lows on Thursday, with Brent crude futures closing at their lowest since January and U.S. crude futures touching a three-month low.

Brent futures were headed for a weekly drop of more than 3%, and West Texas Intermediate futures were poised for a decline of around 4% from last week, as ongoing macroeconomic constraints in the U.S. held prices in the balance.

The backdrop of ‘possibly higher-for-longer rates’ weighed significantly on oil prices this week, according to Priyanka Sachdeva, a senior market analyst at Phillip Nova.

Minutes released on Wednesday from the Federal Reserve’s latest policy meeting showed policymakers questioning whether current interest rates are high enough to tame sticky inflation.

Some officials said they would be willing to raise borrowing costs again if inflation soared. Fed Chair Jerome Powell and other policymakers, however, have since said they feel further rate hikes are unlikely.

Higher rates could slow economic growth and crimp fuel demand.

Gasoline demand in the U.S. reached its highest level since November, the EIA said on Wednesday. That helped support the market as U.S. drivers account for around a tenth of global oil demand, “making the upcoming driving season a pillar of the recovery in global demand growth,” ANZ analysts stated in a note.

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