Oil prices down with US demand decline, high interest rate concerns

Oil prices declined on Thursday after the minutes of the US Federal Reserve's (Fed) recent meeting revealed the transition to low inflation may take longer than expected.

International benchmark Brent crude traded at $81.61 per barrel at 10.09 a.m. local time (0709 GMT), a fall of 0.35% from the closing price of $81.90 per barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $77.20 per barrel at the same time, a 0.48% decrease from the previous session that closed at $77.57 per barrel.

The bank published minutes from its latest meeting on Wednesday, which revealed the policy rate may remain at higher levels for longer than expected.

Concerns remain, however, among Fed officials over a lack of progress on inflation, while some members of the Federal Open Market Committee noted "a willingness" to further tighten monetary policy during the last meeting if "risks to inflation materialize."

The likelihood that the bank will begin reducing interest rates in September dropped to 50% after the minutes were made public, from 65% beforehand.

Statements made by Fed officials over not acting hastily regarding interest rate cuts raised concerns that oil market demand appetite could slow down and put downward pressure on prices.

Statements from Fed officials about failing to act swiftly on interest rate cuts sparked concerns that the demand appetite in the oil market might wane and drive prices lower.

US commercial crude oil inventories increased by 1.8 million barrels during the week ending May 17, according to data released by the Energy Information Administration (EIA) late Wednesday.

The EIA inventories showed a stock build that far exceeded market expectations of a drop of around 2.4 million barrels in the world's largest oil-consuming country, signaling a drop in demand in support of lower prices.

Over the same period, strategic petroleum reserves, which are excluded from commercial crude stocks, also increased by about 1 million barrels.