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Brent crude futures were down 49 cents or 0.5% to $89.99 a
barrel at 1030 GMT, while U.S. West Texas Intermediate crude
futures lost 55 cents or 0.6% to $85.66 a barrel.
"We think it will be difficult to maintain Brent above $90 in
2H24 without actual supply disruption associated with
geopolitical events," said global energy strategist Vikas
Dwivedi of Macquarie.
"As a result, we expect oil to turn bearish as the year
progresses due to non-OPEC supply growth, a material amount of
OPEC+ spare capacity re-entering the market, and the potential
that continuing inflation softens demand."
Minutes from the U.S. Federal Reserve showed officials worried
that progress on inflation might have stalled and a longer
period of tight monetary policy would be needed to tame
inflation in the world's largest economy.
Investors who had earlier expected a rate cut in June now see
September as a likelier timing for the easing cycle to begin,
following a third straight stronger-than-forecast reading on
consumer inflation.
Higher-for-longer rates could dampen economic growth and
suppress demand for oil.
Meanwhile the Middle East is on alert for possible Iranian
retaliation for a suspected Israeli air strike on Iran's embassy
in Syria on April 1.
Earlier this week, Israel and Hamas began a fresh round of
negotiations in their more than six-month-old Gaza war but those
talks have yielded no agreement.
U.S. Secretary of State Antony Blinken has told Israeli Defence
Minister Yoav Gallant that the United States will stand with
Israel against any threats by Iran, the U.S. State Department
said on Wednesday.
"Prices remain sensitive to geopolitical developments in the
Middle East, with market participants pricing for the risks of
supply disruptions if tensions were to drag for longer," said
Yeap Jun Rong, market strategist at IG.
Oil traders will also be looking out for a monthly oil market
report from the Organization of the Petroleum Exporting
Countries (OPEC) due later on Thursday, and the International
Energy Agency's oil market report due on Friday.
(Additional reporting by Shariq Khan in New York and Emily Chow
in Singapore; editing by Christopher Cushing, Jason Neely and
David Evans)
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