# Oil dips after Fed comments, US crude stock build
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-23
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Oil Prices Drop After Powell Warns of Credit Risks and U.S.
Meta Description: Get the latest update on oil prices falling due to credit risks highlighted by Powell and unexpected rise in US crude stocks. Stay informed with Reuters.
URL: https://financedigest.com/oil-dips-after-fed-comments-us-crude-stock-buildhtml

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By Stephanie Kelly and Jeslyn Lerh

SINGAPORE (Reuters) -Oil prices fell on Thursday following three sessions of gains, after Federal Reserve Chair Jerome Powell highlighted banking sector credit risks for the world’s largest economy, while U.S. [crude stocks](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns") rose more than expected.

Brent crude futures fell 66 cents, or 0.9%, to $76.03 a barrel by 0420 GMT, while U.S. West Texas Intermediate crude (WTI) dropped 74 cents, or 1.0%, to $70.16.

Both crude benchmarks settled on Wednesday at their highest close since March 14 after the [dollar slid to a six-week](https://www.financedigest.com/dollar-edges-down-from-six-week-peak-swedish-crown-jumps.html "Dollar edges down from six-week peak, Swedish crown jumps") low.

Economic risks were being flagged out in the [Fed meeting](https://www.financedigest.com/german-gloom-dampens-stocks-as-fed-ecb-meetings-beckon.html "German gloom dampens stocks as Fed, ECB meetings beckon"), while higher-than-expected U.S. crude [oil stockpiles also dampened some optimism around demand outlook,”](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook") said Yeap Jun Rong, market strategist at IG.

However, the weakness in the [dollar has been a bright spot in aiding to drive some resilience in oil](https://www.financedigest.com/oil-up-2-as-dollar-weakens-on-small-us-fed-rate-hike.html "Oil up 2% as dollar weakens on small US Fed rate hike") prices, with some room left for upside in oil prices amid dip-buying seen at the start of this week, Yeap added.

The [Fed raised interest rates](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") by a quarter of a percentage point, while indicating that it was on the verge of pausing further increases in borrowing costs, amid recent turmoil in financial markets spurred by the collapse of two U.S. banks.

Powell said on Wednesday that [banking industry stress could trigger a credit](https://www.financedigest.com/bank-shares-rise-after-credit-suisse-rescue-eases-crisis.html "Bank shares rise after Credit Suisse rescue eases crisis") crunch, with “significant” implications for an economy that U.S. central bank [officials projected would slow even more this year](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years") than previously thought.

Meanwhile, U.S. [crude oil](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") stockpiles rose unexpectedly last week to their highest in nearly two years, latest data from the Energy Information Administration (EIA) showed.

Crude inventories rose by 1.1 million barrels in the week to March 17 to 481.2 million barrels, the highest since May 2021. Analysts in a [Reuters poll](https://www.financedigest.com/bank-of-england-to-raise-rates-by-50bps-again-to-tame-inflation-reuters-poll.html "Bank of England to raise rates by 50bps again to tame inflation: Reuters Poll") had expected a 1.6 million-barrel drop.

“Despite all the bearish chatter over the U.S. oil production growth outlook for 2023, overstating cost [inflation and lower](https://www.financedigest.com/britains-next-sees-lower-clothing-inflation-shares-dip-on-cautious-outlook.html "Britain’s Next sees lower clothing inflation, shares dip on cautious outlook") capex (capital expenditure), the latest EIA weekly report confirms the pivotal role of U.S. oil for [global](https://www.financedigest.com/global-stocks-close-in-on-4-week-highs-oil-rises-on-hopes-of-soft-landing.html "Global stocks close in on 4-week highs, oil rises on hopes of ‘soft landing’") oil markets,” Citi analysts said in a note on Thursday.

Gross [exports of crude oil and oil products hit](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") a new high just shy of 12 million barrels per day, way above any other country’s supply levels, the analysts added, citing EIA data.

(Reporting by Stephanie Kelly and Jeslyn Lerh; Editing by Jamie Freed and Jacquelline Wong)


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