Oil prices are calm before a potential US rate hike that may curb crude demand
Oil prices were little changed on Thursday as investors weighed the supply crunch amid the prospect of a major US rate hike that would curb inflation and curb raw demand.
Brent crude futures for September rose 5 cents to $99.62 a barrel as of 0620 GMT, after falling below $100 for the second session on Wednesday.
West Texas Intermediate (WTI) crude for August delivery was $96.23, down 7 cents after rising 46 cents in the previous session.
Oil prices have fallen over the past two weeks amid recession concerns, despite a drop in crude and refined exports from Russia due to Western sanctions and supply disruption in Libya.
Oil supply fundamentals do not seem to be changing significantly, which is probably why we see Brent still holding at $100.
The US Federal Reserve appears to be stepping up its battle with the highest inflation in 40 years with a massive 100 basis point rate hike this month after a harsh inflation report showing price pressures accelerating.
The Fed's rate hike is expected to follow a similar surprise move by the Bank of Canada on Wednesday.
Investors also flocked to the dollar, which is often seen as a safe-haven asset. The dollar index hit a 20-year high on Wednesday, making oil purchases more expensive for non-US buyers.
Concerns about reining in new cases of a highly contagious sub-variant of COVID-19 in many Chinese cities have also capped oil prices.
China's daily crude oil imports in June fell to their lowest level since July 2018, as refineries await lockdown measures that may curb the demand.
US President will fly to Saudi Arabia on Friday, where he will attend the Gulf allies' summit and invite the allies to pump more oil.
However, reserve capacity at the Organization of the Petroleum Exporting Countries is dwindling as most producers are pumping at maximum capacity, and there are doubts as to how much extra product Saudi Arabia can bring to market.
Data from the US Energy Information Administration (EIA) indicate that with the supplied product, demand declined to 18.7 million barrels per day, the lowest level since June 2021.
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