Crude oil prices fell on Thursday pressured by a stronger US dollar, but losses were limited by a big drop in crude oil inventories in the United States, the world’s top oil consumer.

Brent crude oil futures dropped by 74 cents, or 1 per cent,to $73.65 a barrel by 0103 GMT after reaching its highest since April 2019 in the previous session.

US crude oil futures fell by 69 cents, or 1 per cent, to $71.46 a barrel, after reaching its highest since October 2018 the previous day.

“Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.

Also read: Oil prices rise on improved demand outlook, falling stockpiles

“The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.”

The US dollar boasted its strongest single day gain in 15 months after the Federal Reserve signalled it might raise interest rates at a much faster pace than assumed.

A firmer green back makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.

Still, oil price losses were limited as data from the Energy Information Administration showed that US crude oil stock piles dropped sharply last week as refineries boosted operations to their highest since January 2020, signalling continued improvement in demand.

Also read: Asian markets on edge, oil hits highs

Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4 per cent in May from the same month a year ago to a record high.

“This pull back in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.

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