Oil stabilizes after a sudden drop in US crude inventories

Oil prices maintained most of the gains achieved on Wednesday in early trading on Thursday, while markets assessed a sudden drop in US crude stocks against the possibility of weak demand after the Federal Reserve Chairman hinted at the possibility of further interest rate hikes.

And by 0015 GMT, Brent crude futures fell eight cents, or 0.1 percent, to $ 77.04 a barrel, while West Texas Intermediate crude futures fell five cents, or 0.1 percent, to $ 72.48.

The two crudes rose a dollar a barrel in the previous session, while corn and soybean prices rose in the United States to their highest levels in several months, which led to expectations that their shortages around the world would reduce blending with biofuels and increase demand for oil.

Supporting the market, US crude oil inventories fell by about 1.2 million barrels in the week ending June 16, sources said, citing data from the American Petroleum Institute. This came against the expectations of analysts, an increase of 300 thousand barrels.

Official inventory data from the US Energy Information Administration is due later on Thursday.

Meanwhile, Federal Reserve Chairman Jerome Powell confirmed in congressional testimony that the central bank’s goal is to rein in inflation, and said that a 25 basis point rate hike by the end of the year is a “very good guess.”

Higher interest rates ultimately increase borrowing costs for consumers, which can slow economic growth and reduce demand for oil.

The dollar also rose against a basket of currencies after Powell’s remarks. A strong dollar affects demand for oil, which becomes more expensive for buyers holding other currencies.