Oil prices fell in early trade on Wednesday as investors digested news that the U.S. Federal Reserve has opted against cutting interest rates in the near future, while ample U.S. crude and fuel stocks further weighed on the market.
Brent crude futures lost 14 cents, or 0.17 per cent, to $82.46 a barrel at 0039 GMT, and U.S. West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.2 per cent, to hit $78.34. Both benchmarks had gained about 0.8 per cent in the previous session.
The Federal Reserve held interest rates steady on Wednesday and pushed out the start of rate cuts to perhaps as late as December.
Higher borrowing costs tend to dampen economic growth, and could, by extension, limit oil demand.
Fed Chair Jerome Powell noted in a press conference after the end of a two-day policy meeting that inflation had fallen without a major blow to the economy, and he said there was no reason to think that can’t go on.
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.
It urged the U.S. to pressure Israel to accept an agreement leading to a permanent ceasefire in Gaza as well as full withdrawal from the enclave, reconstruction and release of Palestinian prisoners.
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.
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 (EIA) showed on Wednesday.
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