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Crude Oil Futures Experience Slight Dip Amid Interest Rate Concerns
In early Friday trading, crude oil futures experienced a slight decline due to the ongoing prospect of sustained high interest rates in both Asia and the United States. Despite this, a reduction in U.S. oil inventories provided some support to prevent a more significant drop in prices.
Market Movements
Brent futures for August saw a minor decrease by 11 cents, settling at $85.60 per barrel at 0013 GMT. Similarly, U.S. crude futures fell by 9 cents, pricing at $81.20 per barrel.
Influencing Factors
Japan's economic data revealed a 2.5% rise in core consumer prices last month compared to the previous year. This increase, up from the previous month, signals that the country's central bank might be on track to raise interest rates further in the coming months.
In the United States, released data showed a reduction in new unemployment benefit claims for the week ending June 14. This indicator of continuing robustness in the job market implies that the U.S. Federal Reserve might maintain higher interest rates for an extended period. Typically, higher interest rates can have a dampening effect on economic activity and, by extension, on the demand for oil.
Support from U.S. Inventories
Contrasting the pressure from interest rate concerns, U.S. government data indicated a significant drawdown in crude oil stockpiles. The Energy Information Administration reported a reduction of 2.5 million barrels in the week ending June 14, decreasing the total to 457.1 million barrels. This drawdown surpassed analysts' expectations, who had forecasted a 2.2 million-barrel decrease.
Notably, gasoline inventories also saw a dramatic reduction, falling by 2.3 million barrels to 231.2 million barrels, defying predictions that anticipated a 600,000-barrel increase.
Industry Reactions
Bob Yawger, director of energy futures at Mizuho in New York, highlighted in a note that this was the first substantial positive report for gasoline inventories during the summer driving season. The strong performance provided some buoyancy to otherwise pressured oil futures.
