Oil futures dipped on Thursday (22 June) amid demand fears after the Federal Reserve chairman hinted at further interest rate hikes, while traders awaited official US inventory data following an industry report that showed an unexpected draw in crude stocks.
Brent LCOc1 futures fell 20 cents, or 0.3%, to $76.92 a barrel at 0400 GMT, while US West Texas Intermediate (WTI) crude CLc1 futures were down 19 cents, or 0.3%, at $72.34.
The benchmarks had gained a dollar a barrel in the previous session as US corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls around the globe could lower biofuel blending and increase oil demand.
However, the market was cautious as Fed Chair Jerome Powell in congressional testimony on Wednesday reinforced that the central bank’s objective was to rein in inflation and said two more 25-basis point rate hikes by year-end was “a pretty good guess”.
Higher interest rates ultimately increase borrowing costs for consumers, which could slow economic growth and reduce oil demand. Oil prices held on to most of the previous session’s gains as the market kept a lookout for fresh drivers, including signs of Chinese demand optimism and the latest US inventory data.
