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Oil prices decline amid caution ahead of Jerome Powell's remarks

Brent crude fell 18 cents, or 0.2%, to $83.03 a barrel by 2:08 p.m. EDT (1808 GMT). U.S. West Texas Intermediate crude fell 16 cents, or 0.2%, to $78.73 a barrel

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Oil prices slipped on Thursday, still under pressure from the previous day's weak data from major economies, which had investors worried about the demand outlook ahead of a speech from U.S. Federal Reserve Chair Jerome Powell.
Brent crude fell 18 cents, or 0.2%, to $83.03 a barrel by 2:08 p.m. EDT (1808 GMT). U.S. West Texas Intermediate crude fell 16 cents, or 0.2%, to $78.73 a barrel. At their session low, both sessions were down by more than a dollar.
"Disappointing data and nerves that the Federal Reserve could reinforce a hawkish stance are weighing on oil," said Fiona Cincotta, analyst at City Index.
On Wednesday, Japan reported shrinking factory activity for a third straight month in August. Euro zone business activity also declined more than expected and Britain's economy looked set to shrink in the current quarter.
U.S. business activity approached the stagnation point in August, with growth at its weakest since February. But data also that showed labor market conditions remained tight despite the Fed's aggressive interest rate hikes.
The economic data has also helped strengthen the U.S. dollar, which dents oil demand by making it more expensive for investors holding other currencies.
"The U.S. is still in a strong position but there are areas of weakness and if interest rates are going to stay higher for longer, further cracks could appear," said Craig Erlam, analyst at OANDA.
"Perhaps this economic doubt has contributed to the stalling we've seen and may even trigger a correction," Erlam added.
Federal Reserve officials and other global central bankers were headed to Jackson Hole, where Powell will address the symposium on Friday. Investor caution on the eve of his remarks lifted the safe-haven dollar. A costlier greenback makes oil more expensive for holders of other currencies, denting demand.
On the supply side, Iran's crude oil output will reach 3.4 million barrels per day (bpd) by the end of September, the country's oil minister was quoted as saying by state media, even though U.S. sanctions remain in place.
U.S. officials are also drafting a proposal that would ease sanctions on Venezuela, allowing it to export more oil if the South American nation moves toward a free and fair presidential election, according to sources.
A larger than expected fall in U.S. crude inventories helped limit oil benchmarks' losses.
U.S. crude inventories fell by 6.1 million barrels in the week to Aug. 18, compared with analysts' expectations in a Reuters poll for a 2.8 million-barrel drop.
Meanwhile, Saudi Arabia is expected to extend its 1 million bpd voluntary production cut into October to help support the market.
(Reporting by Shariq Khan; Additional reporting by Ahmad Ghaddar and Mohi Narayan; Editing by Kim Coghill, David Evans, David Gregorio and Deepa Babington)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Aug 25 2023 | 8:09 AM IST

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