Oil prices edge lower as market weighs U.S. inventory data, interest rate outlook

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US Federal Reserve Board Chairman Jerome Powell testifies at a House Financial Services Committee hearing on the “Federal Reserve’s Semi-Annual Monetary Policy Report,” on Capitol Hill in Washington, DC, March 6, 2024. 
Mandel Ngan | Afp | Getty Images

Oil prices edged lower Thursday, giving up some of the previous session’s gains.

The West Texas Intermediate contract for April lost 33 cents, or 0.42%, to $78.80 a barrel. May Brent futures shed 32 cents, or 0.39%, to $82.64 a barrel.

U.S. crude and the global benchmark gained more than 1% Wednesday after Federal Reserve Chairman Jerome Powell told Congress that interest rates have likely peaked and are expected to come down this year, although the central bank is taking a cautious approach given an uncertain economic outlook.

Powell will give testimony before the Senate Banking Committee later Thursday.

Energy prices also found support from a smaller than expected U.S. crude oil inventory increase and a drop in gasoline stockpiles, potentially indicating that demand is picking up.

Powell’s tesimony to Congress provided the oil market with an adrenaline rush, but his cautious approach on rates ultimately dented traders’ enthusiasm, Tamas Varga, an analyst with broker PVM wrote Thursday.

Crude prices have been grinding higher this year, booking monthly gains in January and February. Goldman Sachs is forecasting Brent to rise near the top of the investment bank’s expected $70 to $90 range for the global benchmark.

“We still expect Brent oil prices to edge up near the top of the $70-90 range this summer driven by a modest [production] deficit, and reach an $87/bbl peak in July,” Daan Struyven, head of oil research at Goldman, told clients in a Thursday note.

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