Oil remains stable as strong US gasoline demand offsets interest rate concerns

Oil remains stable as strong US gasoline demand offsets interest rate concerns
Oil remains stable as strong US gasoline demand offsets interest rate concerns

Oil prices remained stable in early trading on Friday as traders took into account the latest comments from the US Federal Reserve on interest rates amid stagnant inflation, while seasonal fuel demand strengthened in the United States provided support.

Brent oil futures were up 1 cent at $81.37 a barrel by 0002 GMT. West Texas Intermediate (WTI) crude oil futures were down 2 cents at $76.85.

Both benchmarks hit multi-month lows on Thursday, with Brent futures closing at their lowest point since January and U.S. crude futures hitting a three-month low.

Continuing macroeconomic constraints in the United States weighed on prices as investors digested minutes from the latest Fed meeting, which showed policymakers doubted current interest rates would be high enough to curb stubborn inflation.

Some officials have said they would be willing to raise borrowing costs again if inflation rises. However, Fed Chairman Jerome Powell and other policymakers have since said they believe further rate hikes are unlikely.

Meanwhile, strengthening U.S. gasoline demand has helped stabilize prices ahead of Memorial Day weekend, which is considered the start of the U.S. summer driving season.

Demand for gasoline in the United States has reached its highest level since November, the Energy Information Administration (EIA) said Wednesday. That helped support the market because U.S. drivers account for about a tenth of global oil demand, “making the upcoming driving season a pillar of the recovery in global demand growth,” analysts at ANZ in a note.

All eyes are now on the Organization of the Petroleum Exporting Countries and its allies, united as OPEC+, who are due to meet on June 1 to discuss extending voluntary oil production cuts by 2 .2 million barrels per day.

“The market is also reluctant to take an aggressive stance ahead of next week’s OPEC meeting, where supply policy will be discussed,” ANZ analysts added. (Reporting by Georgina McCartney in Houston; Editing by Sonali Paul)

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