SINGAPORE: Oil prices fell following three sessions of gains, after Federal Reserve Chair Jerome Powell highlighted banking sector credit risks for world’s largest economy, while US crude stocks rose more than expected.

Brent crude futures fell 66 cents, or 0.9 percent, to $ 76.03 barrel while US West Texas Intermediate crude (WTI) dropped 74 cents or 1.0 percent, to $ 70.16. Both crude benchmarks settled at their highest close since March 14 after dollar slid to six-week low.

“Economic risks were being flagged out in Fed meeting, while higher-than-expected US crude oil stockpiles also dampened some optimism around demand outlook,” said Yeap Jun Rong, market strategist at IG.

However, weakness in dollar has been bright spot in aiding to drive some resilience in oil prices, with some room left for upside in oil prices amid dip-buying seen at start of this week, Yeap added.

Fed raised interest rates by quarter of percentage point, while indicating that it was on verge of pausing further increases in borrowing costs, amid recent turmoil in financial markets spurred by collapse of two US banks.

Powell said that banking industry stress could trigger credit crunch, with “Significant” implications for an economy that US central bank officials projected would slow even more this year than previously thought.

Meanwhile, US crude oil stockpiles rose unexpectedly last week to their highest in nearly two years, latest data from Energy Information Administration showed. Crude inventories rose by 1.1 million barrels in week to March 17 to 481.2 million barrels, highest since May 2021.

Published in The Daily National Courier, March, 24 2023

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