SINGAPORE: Strong US economic activity suggested that borrowing costs would remain high for an extended time, which could hurt demand. According to Worries Reuters, this led to an ease in oil prices on Thursday.
When US West Texas Intermediate crude dropped 23 cents, or 0.3 percent, to $79.00, Brent futures fell 26 cents, or 0.3 percent, to $83.34 a barrel as of 9:30 a.m. Saudi time, ahead of data on US crude oil stockpiles that is expected later in the day.
A monthly loss is anticipated for both benchmarks; WTI is expected to fall by more than 3 percent, while Brent futures are expected to fall by more than 5 percent from the previous month. Overriding the greater-than-expected decline in oil prices, the overall risk-off climate has translated into some downward pressure on oil prices.
US economic activity continued to expand from early April through mid-May. Still, a Fed survey showed that firms grew more pessimistic about the future while inflation increased at a modest pace.
Higher borrowing costs tend to tie down funds and consumption, a negative for crude demand and prices. The Fed is now seen cutting rates in September at the earliest, compared to a June start that had been expected by markets at the beginning of the year.
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