By Adedapo Adesanya
Oil was almost flat on Thursday as the market weighed tighter US crude supplies with the higher likelihood of an interest rate hike that could affect energy demand.
Brent crude futures appreciated by 0.5 per cent or 13 cents to $76.52 a barrel, as the US West Texas Intermediate crude gained 1 cent to finish at $71.80 a barrel.
The market has been expecting interest rates in the US and Europe to rise further to tame stubborn inflation.
Fears of a global recession mounted after recent surveys showed slower factory and services activity in China and Europe.
A fresh direction was after minutes released on Wednesday showed that a united US central bank, the Federal Reserve, agreed to hold rates steady at its June meeting to buy time and assess the need for further hikes.
This is as most attendees expected they would eventually need to tighten further.
US interest rate futures on Thursday saw an increased probability of another rate rise by the Federal Reserve in November after news private payrolls surged last month, suggesting a still tight and strong labour market.
The benchmark fed funds futures factored in a 48 per cent chance of a hike in November, compared with about 36 per cent the day before, Reuters cited CME’s FedWatch.
It was noted that for August’s Fed policy meeting, the odds of a 25 basis-point hike stood at 95 per cent, compared with 90.5 per cent late on Wednesday.
Supporting prices were data from the Energy Information Administration (EIA) that showed US crude stockpiles fell by more than expected last week.
It reported an estimated inventory decline of 1.5 million barrels for the week to July 1 compared to an estimated inventory draw of a substantial 9.6 million barrels for the previous week, which pushed prices temporarily higher.
At 452.2 million barrels, the EIA said, US crude oil inventories were about the five-year average for this time of the year.
Demand concern, however, continues to weigh on prices, even if the EIA recently revised upwards its fuel demand figures for April, the month with the latest data.
Saudi Arabia and Russia announced a fresh round of output cuts for August. The total cuts now stand at more than five million barrels per day or 5 per cent of global oil output.
The cuts, along with a bigger-than-expected drop in US crude stocks, provided some support for prices.
The Organisation of the Petroleum Exporting Countries (OPEC) is likely to maintain an upbeat view on oil demand growth for next year when it publishes its first outlook for 2024 this month, predicting a slowdown from this year but still remaining above-average increase.
Dipo Olowookere