Oil prices fall after rate hikes, but tight supply still in focus

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Oil prices erased early gains to fall to two-week lows on Thursday on the back of inflation concerns highlighted by interest rate hikes in the United States, Britain and Switzerland, though tight oil supply limited losses.

Brent crude futures were down $1.37, to $117.14 a barrel while U.S. West Texas Intermediate (WTI) crude futures fell $1.29 to $114.02, off 1.1%.

Prices slipped more than 2% overnight after the Federal Reserve raised its key interest rate by 0.75%, the biggest hike since 1994.

On Thursday morning, European stocks tumbled after a surprise rate hike from Swiss National Bank. This was followed by a rate hike by the Bank of England

Hitting supply, Libyan oil output has collapsed to 100,000-150,000 barrels per day (bpd), a fraction of the 1.2 million bpd seen last year.

That is hitting already tight supply, while the International Energy Agency said it expects demand to rise further in 2023, growing by more than 2% to a record 101.6 million bpd.

Optimism that China’s oil demand will rebound as it eases COVID-19 restrictions is also supporting the price outlook.

U.S. crude stocks and distillate inventories rose while gasoline inventories fell in the week through June 10, the Energy Information Administration said.




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