Oil slips further after big decline on Wednesday

London — Oil prices fell on Thursday after posting the largest decline in a month in the previous session, as US interest-rate hike expectations offset the effect of drawdowns in US crude stockpiles.

Brent futures for November delivery were down 97 cents, or 1.04%, to $92.56 a barrel by 8.09am GMT. US West Texas Intermediate crude (WTI) fell 97c, or 1.08%, to $88.69, the lowest since September 14. Both benchmarks had fallen more than $1 in trade earlier on Thursday.

“The Fed kept rates unchanged at yesterday’s FOMC meeting, as widely expected. However, it was still seen as a hawkish pause, which put some pressure on risk assets” such as oil, said ING analysts in a client note.

The US Federal Reserve maintained interest rates after its federal open market committee (FOMC) meeting, but stiffened its hawkish stance with a rate increase projected by year-end which could dampen economic growth and overall fuel demand.

Fed policymakers still see the bank’s benchmark overnight rate range peaking in 2023 at 5.50% to 5.75%, a quarter of a percentage point above the current range.

That stance also led to the dollar surging to its highest since early March, contributing to more expensive commodities such as oil for buyers using other currencies.

Energy markets reacted little to data from the US Energy Information Administration (EIA) on Wednesday showing crude inventories fell in line with expectations last week, with some analysts saying the decline — 2.14-million barrels vs an expected 5.25-million barrels — was smaller than they expected.

“The disappointing inventory drawdown gave impetus for traders to lock in profits following the 10% gain since the start of the month,” ANZ analysts said in a note.

The stock draw was mainly driven by strong oil exports, while gasoline and diesel inventories were drawn down as refiners began annual autumn maintenance, the EIA said in a weekly report.

However, price falls were limited by continuous concern on tight supply globally entering the fourth quarter, with crude stocks at Cushing — the WTI delivery hub — at their lowest since July 2022 and production cuts continuing by oil cartel Opec.

Reuters