June 23 (Reuters) – Oil prices were little changed in
early trading on Friday but were headed for a 3% drop for the
week on worries about the outlook for fuel demand after a
bigger-than-expected interest rate hike in the UK and warnings
about looming U.S. rate hikes.
Brent futures slipped 7 cents, or 0.1%, to $74.07 a
barrel, while U.S. West Texas Intermediate (WTI) crude
futures were down 11 cents, or 0.2%, at $69.40 at 0026 GMT.
Both benchmarks had dropped about $3 in the previous session
after the UK’s central bank raised interest rates by half a
percentage point, sparking fears of an economic slowdown denting
fuel demand.
The rate hike outweighed support from a surprise draw in
U.S. oil stocks.
The market is now waiting for the release of Purchasing
Managers Indexes (PMIs) from around the world on Friday for a
view on manufacturing activity and demand trends.
Japan’s manufacturing activity fell back into contraction in
June and service sector growth slowed for the first time in
seven months, surveys showed on Friday, as business confidence
and demand weakened.
In the U.S., Federal Reserve Chair Jerome Powell said the
central bank would move interest rates at a “careful pace” from
here as policymakers edge towards ending their historic round of
monetary policy tightening.
Higher interest rates increase borrowing costs for
businesses and consumers, which could slow economic growth and
reduce oil demand.
On the supply side, U.S. crude stocks posted a surprise
draw in the last week, helped by strong export demand and low
imports, the Energy Information Administration said on Thursday.
However, gasoline and distillate inventories rose.
(Reporting by Arathy Somasekhar; Editing by Sonali Paul)
