Oil retreats as Fed's rate signal eclipses decline in stockpiles
BNN Bloomberg
Oil fell after the Federal Reserve signaled that at least one more interest-rate hike is possible this year in its fight to subdue stubborn inflation, overshadowing signs of a tighter physical crude market.
Brent futures fell near US$92 a barrel, dropping for a third day in the longest losing run in almost a month. While the US central bank left its benchmark rate unchanged at a midweek meeting, it also flagged borrowing costs will likely stay higher for longer after one more increase this year. Crude fell alongside other risk assets, including equities, while the dollar rose.
The Fed's messaging “has put some pressure on risk assets, including oil,” said Warren Patterson, head of commodities strategy at ING Groep NV. While Brent is likely to break above US$100 in the near term, that won't be sustainable, he said. The bank maintains its call for Brent to average US$92 next quarter.
Still, official data showed oil inventories at the Cushing, Oklahoma, storage hub declined by 2.1 million barrels last week, cutting holdings to the lowest since July 2022. Stockpiles are only narrowly above the 20 million-to-22 million barrel volume that's seen as the minimum operating level for the facility.
