Oil prices remained relatively stable on Thursday, following significant losses in the previous session. The declines were driven by concerns over the prospect of prolonged higher interest rates in the United States (U.S.), as well as a larger-than-expected build in U.S. crude inventories.
The oil markets were digesting the U.S. government’s decision to reimpose sanctions on Venezuela’s oil industry after President Nicolas Maduro failed to hold promised national elections. Venezuela’s oil exports had grown around 12 percent in 2023 to roughly 700,000 barrels per day following the easing of some U.S. sanctions.
Read more: Oil prices slip amid mixed signals from U.S. inventory data, geopolitical concerns
Middle East tensions offset by record U.S. production
Geopolitical tensions in the Middle East remained a source of concern for the markets, but this was offset by data showing record-high U.S. oil production and the substantial build in inventories. The combination of these factors, along with fears of extended higher U.S. interest rates, led to the steep oil price declines on Wednesday.
In Thursday’s trading, Brent crude futures for June delivery rose slightly to $87.42 per barrel, while West Texas Intermediate (WTI) crude futures were flat at $82.20 per barrel as of 21:51 ET (01:51 GMT). Both benchmarks had tumbled around 3 percent in the previous session.
The draw in U.S. distillate and gasoline inventories indicated that fuel demand in the world’s largest consumer remained robust. However, the stronger U.S. dollar, which typically discourages international buyers, also weighed on oil prices.
Overall, the market remained focused on the prospect of higher-for-longer interest rates in the U.S. and the potential impact on global economic activity and oil demand in the coming months.
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