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Oil slips on US growth worries, ample crude supply

By Reuters   |   Jun 13, 2024 at 12:47 AM EST
Oil slips on US growth worries, ample crude supply

By Georgina McCartney

(Reuters) - Oil prices fell in early trade on Thursday, as investors digested that the U.S. Federal Reserve had likely pushed back a possible interest rate cut to December, while ample U.S. crude and fuel stocks also weighed on the market.

Brent crude futures lost 23 cents, or 0.3%, to $82.37 a barrel, as of 0415 GMT, and U.S. West Texas Intermediate (WTI) crude futures fell 20 cents, or 0.3%, to $78.30. Both benchmarks had gained about 0.8% in the previous session.

The Fed held rates steady on Wednesday and pushed out the start of policy easing to perhaps as late as December.

Higher borrowing costs tend to dampen economic growth, and can by extension, limit oil demand.

Fed Chair Jerome Powell said in a press conference after the U.S. central bank's two-day policy meeting ended that inflation had fallen without a major blow to the economy, adding that there was no reason to think that can't go on.

On the supply side, U.S. crude stockpiles rose more than expected last week, driven largely by a jump in imports, while fuel inventories also increased more than anticipated, data from the Energy Information Administration showed on Wednesday.

Also weighing on prices was a bearish report by the International Energy Agency, which warned of excess supply in the near future.

"This is in stark contrast to the bullish report from OPEC+ earlier this week. The oil group maintained its forecasts for strengthening demand," analysts at ANZ Research said.

Traders are also watching ongoing talks for a ceasefire in Gaza, which, if resolved, would reduce fears of potential supply disruptions from the oil producing region.

In the latest attack on shipping, Iran-allied Houthi militants on Wednesday took responsibility for small watercraft and missile attacks that left a Greek-owned coal carrier in need of rescue near Yemen's Red Sea port of Hodeidah.

The militant group has attacked international shipping in the Red Sea region since November in solidarity with the Palestinians in the war between Israel and Hamas.

Late on Wednesday, Palestinian militant group Hamas issued a statement stressing its "positivity" in the ceasefire negotiations.

U.S. Secretary of State Antony Blinken said Hamas had proposed numerous changes to a U.S.-backed proposal for a ceasefire, adding that mediators were determined to close the gaps.

(Reporting by Georgina McCartney in Houston and Sudarshan Varadhan in Singapore; Editing by Sonali Paul and Rashmi Aich)

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