Oil prices edge lower as market weighs U.S. inventory data, interest rate outlook

Oil prices edged lower Thursday, giving up some of the previous session’s gains.

The West Texas Intermediate contract for April lost 20 cents, or 0.25%, to settle at $78.93 a barrel. May Brent futures shed 21 cents, or 0.25%, to $82.77 a barrel.

U.S. crude and the global benchmark gained more than 1% on Wednesday after Federal Reserve Chairman Jerome Powell told Congress that interest rates have likely peaked and are expected to come down this year, although the central bank is taking a cautious approach given an uncertain economic outlook.

In a second day of testimony, Powell told the Senate Banking Committee Thursday that the Fed is “not far” from the point of cutting rates, so long as inflation moves sustainably at 2%.

Energy prices also found support Wednesday from a smaller-than-expected U.S. crude oil inventory increase and a drop in gasoline stockpiles, potentially indicating that demand is picking up.

Powell’s testimony before Congress provided the oil market with an adrenaline rush, but his cautious approach on rates ultimately dented traders’ enthusiasm, Tamas Varga, an analyst at broker PVM, wrote Thursday.

Crude prices have been grinding higher this year, booking monthly gains in January and February. Goldman Sachs is forecasting Brent to rise near the top of the investment bank’s expected $70 to $90 range for the global benchmark.

“We still expect Brent oil prices to edge up near the top of the $70-90 range this summer driven by a modest [production] deficit, and reach an $87/bbl peak in July,” Daan Struyven, head of oil research at Goldman, told clients in a Thursday note.