Oil prices dipped on Thursday, having hit their lowest since late 2021 earlier this week, after Federal Reserve Chair Jerome Powell highlighted banking sector credit risks for the world’s largest economy, while U.S. crude stockpiles swelled.
Brent crude futures were down 54 cents, or 0.7%, to $76.15 a barrel at 0929 GMT, while U.S. West Texas Intermediate crude (WTI) dropped 62 cents, or 0.9%, to $70.28.
Powell said on Wednesday that banking industry stress could trigger a credit crunch, with “significant” implications for an economy that U.S. central bank officials projected would slow even more this year than previously thought.
U.S. crude oil stockpiles rose unexpectedly last week to their highest in nearly two years, latest data from the Energy Information Administration (EIA) showed.
Crude inventories rose in the week to March 17 by 1.1 million barrels to 481.2 million barrels, the highest since May 2021. Analysts in a Reuters poll had expected a 1.6-million-barrel drop.
The dollar slid to a seven-week low against a basket of other currencies, providing a price floor for oil as a weaker greenback makes oil cheaper for holders of other currencies.
Also supportive, Goldman Sachs said on Thursday that demand from China, the world’s biggest oil importer, continued to surge across the commodity complex, with oil demand topping 16 million barrels per day.
The bank forecast Brent to reach $97 a barrel in the second quarter of 2024.
