Oil Prices Steady Post Surprise Dip

In early trade on Thursday, oil prices held on to most of the previous day's gains as markets weighed an unexpected draw in US crude oil stocks against the prospect of weaker demand after the Federal Reserve chairman hinted at further interest rate hikes.

Brent futures were down 8 cents, or 0.1%, to $77.04 a barrel at 0015 GMT, while West Texas Intermediate (WTI) crude futures were down 5 cents, or 0.1%, to $72.48.

The benchmarks had gained a dollar per barrel the previous session as U.S. corn and soybean prices surged to multi-month highs, raising concerns that crop shortages around the world could reduce biofuel blending and increase oil demand.

Supporting the market, U.S. crude oil inventories fell by about 1.2 million barrels in the week ended June 16, sources said citing data from the American Petroleum Institute, an industry group, defying analysts' forecasts for a build of 300,000 barrels.

Official inventory data from the U.S. Energy Information Administration is due later on Thursday. The report was delayed by a day following the Juneteenth public holiday on Monday.

Meanwhile, Fed Chair Jerome Powell in congressional testimony reinforced that the central bank's objective was to rein in inflation and said two more 25-basis point rate hikes by year end was "a pretty good guess".

Higher interest rates ultimately increase borrowing costs for consumers, which could slow economic growth and reduce oil demand.