Oil prices were little changed in early trading on Friday but were headed for a 3 per cent 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 per cent, to $74.07 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 11 cents, or 0.2 per cent, 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.
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