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Ammon News - Oil prices were steady in morning trading on Thursday after falling by nearly 3 per cent the previous day amid concerns of more aggressive interest rate increases, which could lower fuel demand by hurting economic growth.

Brent, the benchmark for two thirds of the world’s oil, was 0.40 per cent higher at $80.92 a barrel at 9.21am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.46 per cent at $74.29 a barrel.

On Wednesday, Brent settled 2.95 per cent lower at $80.60 a barrel while WTI fell 3.16 per cent to $73.95.

Minutes released by the US Federal Reserve from its latest meeting showed that policymakers expect continuing interest rate increases to bring inflation back down to their long-term goal of 2 per cent.

Most officials agreed to reduce the pace of rate increases to 25 basis points, but a few recommended an increase of 50 bps to bring the Fed Funds rate to a level they consider “sufficiently restrictive”.

This month’s US economic data pointed to stubborn inflation in the world’s largest economy, making a case for larger interest rate raises.

After its February meeting, the Fed raised interest rates by 25 bps — the eighth increase since March 2022. The Fed's next meeting is scheduled for March 21 to March 22.

The current target range for interest rates set by the Fed is 4.5 per cent to 4.75 per cent, which is about 50 bps below the end-of-year projection of 5.1 per cent.

“Energy traders not only have to keep up with all the latest supply and demand drivers, but also on how much the dollar might rebound, given the Fed’s tightening path,” said Edward Moya, a senior market analyst at Oanda.

The US Dollar Index — a measure of its value against a weighted basket of major currencies — slipped 0.2 per cent to 104.38 on Thursday.

An increase in interest rates can result in a rise in the value of the dollar, causing oil priced in dollars to become costlier for those holding other currencies.

“Oil will likely remain heavy here as inventories are up, refinery maintenance is here and on global growth concerns,” said Mr Moya.

US crude stocks — an indicator of petroleum demand — rose by 9.9 million barrels last week, according to the American Petroleum Institute.

Meanwhile, analysts polled by Reuters were expecting an increase of 2.1 million barrels in US crude stocks.

Moscow plans to cut oil exports from its western ports by up to 25 per cent in March, compared with February, Reuters reported on Thursday, citing Russian oil sources.

Russia, the world’s second-largest oil producer after Saudi Arabia, had previously said it would cut production by 500,000 bpd, or about 5 per cent of output, next month after the West imposed price caps on its crude and refined products on February 5.