Crude retreats but stay near multi-year highs

Crude oil prices dipped on Thursday as a stronger US dollar brought them off multi-year highs, reports Reuters.

Brent crude oil futures dropped 33 cents, or 0.4 per cent, to $74.06 per barrel by 0836 GMT in the day. They hit their highest since April 2019 in the previous session.

US West Texas Intermediate (WTI) crude futures inched down 28 cents, or 0.3 per cent, to $71.87 per barrel, after reaching their highest since October 2018 the previous day.

The American dollar boasted its strongest single day gain in 15 months after US Federal Reserve signalled it might raise interest rates at a much faster pace than assumed.

A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.

"Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed's hawkish surprise," said Edward Moya, senior market analyst at OANDA.

"This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar," Moya said.

Still, oil price losses were limited as data from the Energy Information Administration showed that US crude oil stockpiles in the world's biggest consumer dropped sharply last week as refineries boosted operations to their highest since January 2020, signalling continued improvement in demand.

Analysts said the 7.4 million-barrel drawdown in crude stocks in the week to June 11 to 466.7 million barrels, the fourth consecutive weekly decline, augurs for improved demand in coming weeks.

Net US crude imports fell last week by 845,000 barrels per day, EIA said, driven by rising exports of nearly 1.0 million bpd.

Both exports and product supplied by domestic refiners increased sharply as consumer activity rebounds from 2020's coronavirus-induced weakness.

"There is a lot of new optimism about demand and I anticipate this will continue into the rest of the summer," said Tony Headrick, energy market analyst at CHS Hedging.

Refinery utilisation rates rose by 1.3 percentage points to 92.6 per cent of overall capacity, a level that predates the coronavirus pandemic in the United States. Refinery crude runs rose by 412,000 bpd in the week, the EIA said.