WionDrive News Desk 
Oil prices declined for the fourth consecutive session on Thursday, as the minutes from the latest U.S. Federal Reserve meeting revealed discussions about potentially further tightening interest rates if inflation remains stubbornly high, a move that could dampen oil demand.
Brent crude futures fell by 46 cents, or 0.6 per cent, to $81.44 a barrel at 0424 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 54 cents, or 0.7 per cent, trading at $77.03. Both benchmark prices experienced a drop of more than 1 per cent on Wednesday.
The minutes released on Wednesday from the Federal Reserve’s most recent policy meeting showed that the U.S. central bank’s response to persistent inflation would “involve maintaining” its current policy rate for now, but also included discussions about the possibility of further rate hikes.
The prospect of higher interest rates, aimed at curbing inflation, could potentially weaken oil demand, contributing to the downward pressure on oil prices in the current trading session.
“Various participants mentioned a willingness to tighten policy further should risks to inflation materialise in a way that such an action became appropriate,” minutes of the Fed’s meeting said.
Higher interest rates tend to increase borrowing costs, which could constrain economic growth and oil demand in the United States, the world’s largest oil-consuming nation. By raising the cost of borrowing, it reduces the availability of funds that could otherwise fuel economic expansion and, consequently, drive higher energy consumption.
Adding further downward pressure on oil prices, data from the U.S. Energy Information Administration revealed that U.S. crude stocks rose by 1.8 million barrels last week, defying expectations of a 2.5 million-barrel drawdown in inventories.
On a global scale, physical crude markets have more recently been under pressure due to soft refinery demand and ample supply. The combination of subdued demand from refineries and abundant crude oil supplies has weighed on the physical crude markets, contributing to the overall bearish sentiment.
Russia has acknowledged exceeding its OPEC+ production quota in April, citing “technical reasons” for the overshoot. The Russian Energy Ministry stated late on Wednesday that it will soon present a plan to the OPEC Secretariat to compensate for the error and bring its production back in line with the agreed quotas.
Despite Russia’s temporary breach, Citi anticipates that OPEC+, the alliance comprising OPEC members and partners led by Russia, will maintain its current production cuts through the third quarter of 2024 when it convenes its next meeting on June 1.
