Oil prices slip as rate hike worries come into focus

Oil prices slip as rate hike worries come into focus

Crude oil futures slid in early trade on Friday on the prospect of higher-for-longer interest rates in Asia and the United States, while falling U.S. oil inventories kept prices from moving lower.

Brent futures for August delivery dipped 11 cents to $85.60 a barrel by 0013 GMT, while U.S. crude was down 9 cents to $81.20 per barrel.

Japan's core consumer prices last month gained 2.5% from a year earlier, data showed on Friday, growing from the previous month and keeping the country's central bank on track to raise interest rates higher in the coming months.

U.S. data released on Thursday showed that the number of Americans filing new claims for unemployment benefits fell in the week ended June 14, with broader strength in the jobs market persisting. Still-strong employment raised the prospect the U.S. Federal Reserve could leave rates higher for longer.

Higher interest rates typically weigh on economies and, in turn, on oil demand.

Oil was supported by government data released on Thursday that showed a drawdown in U.S. crude stockpiles by 2.5 million barrels in the week ending June 14 to 457.1 million barrels, the Energy Information Administration said, compared with analysts' expectations in a Reuters poll for a 2.2 million-barrel draw.

Gasoline inventories fell by 2.3 million barrels to 231.2 million barrels, the EIA said, compared with forecasts for a 600,000-barrel build.

"Gasoline finally came to life and posted its first strong report of the summer driving season," Bob Yawger, director of energy futures at Mizuho in New York, said in a note.