Oil prices edged higher today, buoyed by a bigger-than-expected fall in US inventories, but fears that rising interest rates could dent global economic growth limited further gains.
Brent crude futures was up 43 cents, or 0.6%, to $74.46 a barrel this afternoon, while West Texas Intermediate (WTI) crude futures rose 48 cents, or 0.7%, to $70.04 a barrel.
Both benchmarks gained about 3% yesterday after the US Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23.
This far exceeded the 1.8-million barrel draw analysts had forecast in a Reuters poll.
"The jury is still out on whether the second part of 2023 will bring with it the long-anticipated decline in inventories. Nonetheless, the impact that stocks have on oil prices was on display yesterday on a smaller scale," PVM Oil analyst Tamas Varga said.
Concerns about the impact that rising interest rates will have on economic growth came back to the fore, however, put a lid on further gains.
Leaders of the world's top central banks reaffirmed yesterday that they think further policy tightening will be needed to tame stubbornly high inflation but still believe they can achieve that without triggering outright recessions.
US Federal Reserve Chair Jerome Powell did not rule out further hikes at the central bank's next meeting, while European Central Bank President Christine Lagarde cemented expectations for a ninth consecutive rise in euro zone rates in July.
Adding to pressure, annual profits at industrial firms in China, the world's second-biggest oil consumer, extended a double-digit decline in the first five months as softening demand squeezed margins.
"The lack of prospects for fuel demand growth has limited the gain in oil prices, even with supply curbs by oil producers," said Tetsu Emori, CEO of Emori Fund Management.
Facing falling prices, Saudi Arabia this month pledged to sharply cut its output in July, adding to a broader OPEC+ deal to limit supply into 2024.
