Jun 16, 2022 02:50AM ET
By: AnalysisWatch
Oil prices recovered on Thursday from a sharp drop in the previous session, supported by tight crude supply and peak summer consumption, after a sharp rate hike in the U.S. sparked fears of slowing economic growth and lower fuel demand.
Brent crude futures rose 86 cents, or 0.7%, to $119.37 a barrel by 06:44 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed 96 cents, or 0.8%, to $116.27 a barrel.
Prices slumped more than 2% overnight after the Federal Reserve raised its key interest rate by three-quarters of a percentage point, the biggest increase since 1994.
The dollar index retreated from a 20-year high, easing downward pressure on oil prices. A stronger greenback makes U.S. dollar-denominated oil more expensive for holders of other currencies, curbing demand.
Investors remained focused on tight supplies and strong demand as Western sanctions limited access to Russian oil.
In Libya, oil production has slumped due to the shutdown of production and export facilities as a tactic in the country's political stalemate. Output has fallen to between 100,000 and 150,000 barrels a day, a spokesman for the oil ministry said on Tuesday, a fraction of the 1.2 million barrels a day recorded last year.
The price outlook was also supported by optimism that China's oil demand will pick up again after the easing of the COVID-19 restrictions.
A recovery in demand sentiment in China and an expected seasonal increase in OECD oil demand in August leaves upside risk to prices into Q3 2022," said Baden Moore, head of commodities research at National Australia Bank
U.S. crude oil production, which has been largely flat in recent months, increased by 100,000 barrels a day last week to 12 million barrels a day, the highest level since April 2020, data from the Energy Information Administration showed.
U.S. crude oil and distillate inventories rose in the week to June 10, while gasoline inventories fell, the EIA said.
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