LONDON — Brent crude oil eased on Thursday after the US Federal Reserve indicated it could end its stimulus programme and raise interest rates sooner than expected.
In comments that sent stocks and bonds tumbling, Fed chairwoman Janet Yellen on Wednesday said the bank would probably end its huge bond-buying programme this northern autumn, and could start raising interest rates about six months later.
While the announcement suggested policy makers are becoming more confident that the world’s largest economy and top oil consumer can stand on its own feet, such a shift would drain the cheap liquidity that has boosted commodities.
"The Fed’s move came as something of a surprise in terms of the timing for increasing rates," Petromatrix analyst Olivier Jakob said.
"Since it will be about the reallocation of positions, and there’s more speculative length in US oil, it will have a bigger effect on US oil than Brent."
Brent was down 15c at $105.70 a barrel by 9.15am GMT, after settling 94c lower.
US crude traded 17c lower at $100.20 a barrel. The April contract, which expires on Friday, had closed 67c higher on Wednesday after data showed a fall in crude inventories at the Cushing, Oklahoma hub.
Stocks at Cushing fell 989,000 barrels last week, down for a seventh straight week as a TransCanada Corp pipeline continued to drain oil to the Gulf Coast, where stocks rose 4.7-million barrels to the highest level yet this year, data from the US Energy Information Administration showed.
But total US oil stocks rose for a ninth week, soaring nearly 6-million barrels or more than double forecasts as refinery utilisation rates fell to the lowest in nearly a year.
"We believe that the previously ample stocks at Cushing are predominantly being moved to — rather than being consumed on — the Gulf Coast, with consequently limited effect on overall crude stocks," BNP Paribas analysts said in a note.
Geopolitical tension
Oil prices drew some support from tension in Ukraine and Russia, the world’s biggest oil producer.
The US warned that Moscow was on a "dark path" to isolation on Wednesday as Russian troops seized two Ukrainian naval bases, including a headquarters in the Crimean port of Sevastopol.
The dramatic seizure came as Russia and the West dug in for a long confrontation over Moscow’s annexation of Crimea, with the US and Europe groping for ways to increase pressure on a defiant Russian President Vladimir Putin.
