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Oil prices edged lower on Thursday after U.S. Energy Secretary Jennifer Granholm told lawmakers that refilling the country’s Strategic Petroleum Reserve (SPR) would be difficult this year and may take several years.

Brent crude futures fell 46 cents, or 0.6%, to $76.23 a barrel by 2:15 p.m. EDT (1815 GMT), while the U.S. West Texas Intermediate crude futures slid by 57 cents, or 0.8%, to $70.33 a barrel.

Granholm’s comments likely spooked the market about a potential oversupply, especially as the Energy Department plans to proceed with an additional release of 26 million barrel as part of its congressional mandate, UBS analyst Giovanni Staunovo said.

Oil benchmarks were slightly higher before the news on hopes that a lower dollar and higher gasoline prices would spur more demand for the commodity.

The dollar index traded at its lowest since Feb. 3, a day after the Federal Reserve hinted it was nearing a pause in its interest rate-hike cycle. A weaker greenback makes dollar-denominated oil more attractive to holders of foreign currencies, lifting demand.

Federal Reserve policymakers believe beating back inflation may require just one more interest-rate hike this year but less easing next year than most thought would be appropriate just three months ago.

Oil prices also found some support as RBOB gasoline futures hit a 10-day high on Thursday after the U.S. Energy Information Administration said stockpiles of the product fell by the most last week since September 2021. [EIA/S]

Higher gasoline demand will encourage refiners to use more crude oil to turn it into the road transportation fuel, Mizuho analyst Robert Yawger said.

“That large draw of 6 million barrels in EIA’s report has left a big impact on the market as the gasoline situation is looking a bit tight here,” Yawger said.

Also supportive, Goldman Sachs on Thursday said demand from China, the world’s biggest oil importer, continued to surge across the commodity complex, with oil demand topping 16 million barrels per day.

The bank forecast Brent to reach $97 a barrel in the second quarter of 2024.