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Fed's Powell sets scene for higher and faster rate hikes
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US crude stocks fall, gasoline draws less than expected
-EIA
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US to only release oil reserves for emergencies -Granholm
(Updates with settlement prices, details on SPR sales)
By Arathy Somasekhar
HOUSTON, March 8 (Reuters) - Oil prices fell on
Wednesday as fears that more aggressive U.S. interest rate hikes
would pressure economic growth and oil demand outweighed a
larger-than-expected draw in U.S. crude stocks.
Both oil benchmarks had dropped by more than 3% on Tuesday
after comments by U.S. Federal Reserve Chair Jerome Powell that
the central bank would likely need to raise interest rates more
than expected in response to recent strong data.
Brent crude futures were down 63 cents, or 0.8%, to $82.66 per barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 92 cents, or 1.2%, to $76.66 a barrel. "Oil prices are still seeing downward pressure due to the hawkish comments coming out of the Fed indicating higher interest rates for a longer period of time," said Andrew Lipow, president of consultants Lipow Oil Associates.
A stronger dollar also capped oil prices earlier in the session. Powell's comments had propelled the U.S. dollar, which typically trades inversely with oil, to hit a three-month high against a basket of currencies. U.S. crude stocks fell 1.7 million barrels last week, government data showed, compared with analyst estimates for a build of 395,000. Industry data late Tuesday showed a decline in crude inventories for the first time after a 10-week build. U.S. gasoline stocks drew by 1.1 million barrels, according to official data, less than the 1.8 million forecast, adding to demand concerns. Distillate inventory grew by 138,000 barrels, compared with expectations for a 1 million-barrel draw.
Barclays lowered its 2023 Brent forecast by $6 to $92 a
barrel and for WTI by $7 to $87, "due primarily to more
resilient-than-expected Russian supplies," the bank said.
"(We) expect the continued recovery in civil aviation demand
in China and neighboring countries, a stabilization in
industrial activity and slower non-OPEC+ supply growth to drive
the oil market balance into a deficit later this year," the bank
added.
Oil ministers and executives continued to debate supply
tightness at a conference in Houston, with Angola's secretary of
state for oil and gas saying there was no need for the
Organization of the Petroleum Exporting Countries to increase
output to make up for Russia's 500,000 barrel per day cut.
Meanwhile, a group of bipartisan U.S. senators said they
have reintroduced legislation to pressure OPEC to stop making
output cuts.
U.S. Energy Secretary Jennifer Granholm also said that any
further releases from the U.S. Strategic Petroleum Reserve would
be due to disruptions like the war in Ukraine.
(Additional reporting by Jeslyn Lerh in Singapore; editing by
David Gregorio, Kirsten Donovan and Marguerita Choy)
