Petroleum futures moved downward Thursday, with trader expectations of further interest rate hikes countered by potentially bullish U.S. oil inventory data after preliminary figures showed a fall in stocks.
Brent futures dropped by $1.36, or 1.7%, to $75.78 U.S. a barrel and U.S. West Texas Intermediate (WTI) crude futures were down $1.30, or 1.8%, at $71.23.
The benchmarks had firmed in the previous session as U.S. corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls could lower biofuels blending and increase oil demand.
However, the market was cautious after Fed Chair Jerome Powell said two more interest rate hikes of 25 basis points each by the end of the year was “a pretty good guess.”
The Bank of England raised rates for a 13th time Thursday morning — 50 basis points this time — in the face of stubbornly strong inflation.
Higher interest rates 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, such as official U.S. oil inventory data due Thursday and Chinese factory activity data due next week.
In a preliminary indicator, industry data showed U.S. crude oil inventories fell by about 1.2 million barrels last week, defying forecasts for a build of 300,000 barrels.