Oil pulls back from seven-week high as investors reassess Fed rate cut expectations

(Investing) – NEW YORK -Oil prices eased on Thursday, retreating from the previous session’s seven-week high, as new U.S. economic data tempered optimism around further interest rate cuts.

Brent futures were down 25 cents, or 0.36%, at $69.06 a barrel by 12:24 p.m. EDT (1624 GMT). U.S. West Texas Intermediate futures lost 33 cents, or 0.51%, to $64.66.

Both benchmarks gained 2.5% on Wednesday to reach their highest since August 1, driven by a surprise drop in U.S. weekly crude inventories and concerns that Ukraine’s attacks on Russia’s energy infrastructure could disrupt supplies.

U.S. gross domestic product increased at an upwardly revised 3.8% annualized rate last quarter, the Commerce Department’s Bureau of Economic Analysis said in its latest estimate on Thursday.

“The initial reaction on that was a sell-off,” said Phil Flynn, a senior analyst at Price Futures Group.

Stronger than expected economic data would make the Federal Reserve more cautious about cutting interest rates.

The U.S. central bank cut rates by 25 bps last week, its first cut since December, and had signaled more reductions ahead.

“We have a generally risk-off market,” said Giovanni Staunovo, commodity analyst at UBS. Two consecutive down days for U.S. equities are putting pressure on oil prices, he added.

Price pressure also came from bearish expectations on supply fundamentals, with more oil expected soon from Iraq and Kurdistan.

“The return of Kurdish supplies adds back fears of an oversupply narrative, propelling a pullback in prices that hover near a seven-week high,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.