Oil steadies after spiking on U.S. inventory fall


London (Reuters) – Oil prices steadied on Thursday, a day after rising sharply on a bigger-than-expected fall in U.S. inventories, as attention shifted back to rising interest rates denting global economic growth.

Brent crude futures was up 10 cents, or 0.1%, to $74.13 a barrel by 1032 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 11 cents, or 0.2%, to $69.67 a barrel.

Both benchmarks gained about 3% on Wednesday after the U.S. Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million barrel draw analysts had forecast in a Reuters poll.

“The jury is still out on whether the second part of 2023 will bring with it the long-anticipated decline in inventories. Nonetheless, the impact that stocks have on oil prices was on display yesterday on a smaller scale,” PVM Oil analyst Tamas Varga said.

Concerns about the impact that rising interest rates will have on economic growth came back to the fore, however, halting the rally.

Leaders of the world’s top central banks reaffirmed on Wednesday that they think further policy tightening will be needed to tame stubbornly high inflation but still believe they can achieve that without triggering outright recessions.

U.S. Federal Reserve Chair Jerome Powell did not rule out further hikes at the central bank’s next meeting, while European Central Bank President Christine Lagarde cemented expectations for a ninth consecutive rise in euro zone rates in July.

Adding to pressure, annual profits at industrial firms in China, the world’s second-biggest oil consumer, extended a double-digit decline in the first five months as softening demand squeezed margins.

“The lack of prospects for fuel demand growth has limited the gain in oil prices, even with supply curbs by oil producers,” said Tetsu Emori, CEO of Emori Fund Management Inc.

Facing falling prices, Saudi Arabia this month pledged to sharply cut its output in July, adding to a broader OPEC+ deal to limit supply into 2024.

Brent’s six-month backwardation reached its lowest since December, but still indicated higher demand for immediate delivery.

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