Image: Reuters Berita 24 English - After a big U.S. rate hike stoked fears of slower economic growth and reduced fuel demand, oil prices re...
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| Image: Reuters |
Berita 24 English - After a big U.S. rate hike stoked fears of slower economic growth and reduced fuel demand, oil prices recovered on Thursday following a severe plunge in the previous session, buoyed by tight oil supplies and peak summer use.
Brent crude prices were up 86 cents, or 0.7 percent, to $119.37 per barrel by 0644 GMT, while WTI crude futures were up 96 cents, or 0.8 percent, to $116.27 per barrel.
After the Federal Reserve hiked its main interest rate by three-quarters of a percentage point, the highest increase since 1994, prices fell more than 2% overnight.
Oil prices eased as the dollar index fell from a 20-year high, alleviating downward pressure. A higher dollar makes oil bought in US dollars more expensive for holders of foreign currencies, reducing demand.
As Western sanctions hampered access to Russian oil, investors remained focused on tight supply and strong demand.
"Overall, it was a tumultuous session yesterday across practically all markets," said Howie Lee, an economist at Singapore's OCBC bank.
"Because of the tight fundamentals, any drops in oil prices are likely to be short-lived, shallow, or both."
Due to the stoppage of production and export facilities in Libya as a tactic in the country's political deadlock, oil output has plummeted. According to a spokeswoman for the oil ministry, production has dropped to 100,000-150,000 barrels per day, a fraction of the 1.2 million bpd witnessed last year.
The price outlook was also bolstered by expectations that China's oil demand would increase when COVID-19 limitations were eased.
"Price risk is to the upside through 3Q 2022, with a rebound in China demand sentiment and an expected seasonal ramp-up in OECD oil demand into August," said Baden Moore, head of commodities research at the National Australia Bank.
The Energy Information Administration reported that US crude output increased 100,000 barrels per day last week to 12 million bpd, the highest level since April 2020, after being essentially unchanged in recent months. [EIA/S]
In the week ending June 10, crude and distillate inventories in the United States increased, but gasoline inventories decreased, according to the EIA.
