OIL prices settled 1 per cent lower on Thursday, reversing early gains after US Energy Secretary Jennifer Granholm told lawmakers that refilling the country’s Strategic Petroleum Reserve (SPR) may take several years.

Granholm’s comments fed worries about potential oversupply, especially as the Energy Department plans to proceed with an additional release of 26 million barrel as part of its congressional mandate, UBS analyst Giovanni Staunovo said.

Brent crude futures fell by 78 cents, or 1 per cent, to settle at US$75.91 a barrel. US West Texas Intermediate crude futures slid by 94 cents, or 1.3 per cent, to end the session at US$69.96 a barrel.

Oil benchmarks had pushed about 1 per cent higher before Granholm’s comments, underpinned by a lower dollar and higher petrol prices.

The dollar index traded at its lowest since Feb 3, a day after the Federal Reserve hinted it was nearing a pause in interest rate hikes. A weaker greenback makes dollar-denominated oil more attractive to holders of foreign currencies.

Federal Reserve policymakers believe beating back inflation may require just one more interest-rate hike this year but less easing next year than most had expected just three months ago.

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Also supporting crude prices, RBOB petrol futures hit a 10-day high after the US Energy Information Administration said stockpiles of the product fell last week by the most since September 2021.

Higher petrol demand will encourage refiners to use more crude oil to make fuel, Mizuho analyst Robert Yawger said.

“That large draw of 6 million barrels in EIA’s report has left a big impact on the market as the petrol situation is looking a bit tight here,” Yawger said.

Also supportive, Goldman Sachs said commodities demand was surging in China, the world’s biggest oil importer, with oil demand topping 16 million barrels per day.

The bank forecast Brent would reach US$97 a barrel in the second quarter of 2024. REUTERS