(Reuters) – Oil prices were down on Friday and on track to end a two-week winning streak after the U.S. central bank indicated interest rate cuts could be delayed by at least two more months.
Brent crude futures were down 94 cents, or 1.1%, at $83.73 a barrel at 1015 GMT on Friday, while U.S. West Texas Intermediate crude futures were 99 cents, or 1.3%, lower at $77.62.
Both benchmarks are on track to end the week lower, after two straight weeks of gains, but indications of healthy fuel demand and supply concerns could revive prices in coming days with physical oil prices robust.
U.S. Federal Reserve policymakers should delay interest rate cuts by at least another couple of months to see if a recent uptick in inflation signals stalling progress toward price stability or is just a bump in the road, Fed Governor Christopher Waller said on Thursday.
Higher interest rates for longer could slow economic growth, which could curb oil demand in the world’s largest oil consumer. But some analysts say demand has remained largely healthy, including in the U.S.
Analysts at ANZ research said U.S. crude oil inventories rose at a less-than-expected rate last week, while run rates at refineries ended a streak of declines and may increase in coming weeks.
JPMorgan’s high frequency demand indicators are showing oil demand rising 1.7 million barrels per day month over month through Feb. 21, its analysts said in a note on Friday.
“This compares to 1.6 mbd increase observed during the prior week, likely benefitting from increased travel demand in China and Europe,” the analysts said.
Oil benchmarks pared some of their Thursday gains after Waller’s comments.
The U.S. Fed has held its policy rate steady in the 5.25%-5.5% range since last July, and minutes of its policy meeting last month show most central bankers were worried about moving too quickly to ease policy.
Waller also pushed back on the idea that the Fed risks sending the economy into recession if it waits too long to cut rates, saying the Fed can afford to “wait a little longer”.
Oil futures had settled higher on Thursday as hostilities continued in the Red Sea, with Iran-aligned Houthis continuing attacks near Yemen.
Israel Prime Minister Benjamin Netanyahu’s war cabinet has approved sending negotiators to truce talks taking place in Paris on Friday as pressure mounts in the Middle East, according to a source briefed on the matter and Israeli media.
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