Last update: 04 May 2023, 00:50 HST
A day earlier, both benchmarks fell 5%, their biggest daily percentage declines since early January. (Image: Reuters file)
U.S. West Texas Intermediate (WTI) crude fell $3.06, or 4.3%, to $68.60. WTI’s session low was $67.95 a barrel, the lowest since March 24
Oil prices fell 4% on Wednesday, extending steep losses from the previous session after the U.S. Federal Reserve raised interest rates and investors worried about the economy.
Brent futures fell $2.99, or 4%, to $72.33 a barrel, the lowest close for the global benchmark since December 2021. Brent hit a low of session of $71.70 a barrel, its lowest since March 20.
U.S. West Texas Intermediate (WTI) crude fell $3.06, or 4.3%, to $68.60. WTI’s session low was $67.95 a barrel, the lowest since March 24.
A day earlier, both benchmarks fell 5%, their biggest daily percentage declines since early January.
The Fed raised interest rates by a quarter of a percentage point on Wednesday afternoon, putting pressure on oil prices as traders feared a slowdown in economic growth could hurt demand for oil. energy.
But the Fed has also signaled that it may suspend further increases, giving authorities time to assess the fallout from recent bank failures, await the resolution of a political stalemate over the US debt ceiling and monitor inflation.
Banking sector concerns returned to the fore on Monday after US regulators seized First Republic, the third major US institution to fail in two months, with JPMorgan Chase & Co agreeing to take $173 billion in loans from the bank, $30 billion in securities and $92 billion in deposits.
“The Fed going into pause mode should be very supportive of the price of oil,” said Price Futures Group analyst Phil Flynn. “The big question is whether or not we’re going to have more shoe scraps in banking.”
The European Central Bank is also expected to raise rates at its policy meeting on Thursday.
Also putting pressure on oil prices, government data showed U.S. gasoline inventories unexpectedly rose by 1.7 million barrels last week. Analysts polled by Reuters had expected a drop of 1.2 million barrels. [EIA/S]
“The most remarkable thing is that gasoline demand has returned all of the increases we’ve seen in previous weeks,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Crude inventories in the United States fell 1.3 million barrels during the week, against forecasts for a decline of 1.1 million barrels.
In China, data over the weekend showed April manufacturing activity unexpectedly fell in the world’s biggest energy consumer and top buyer of crude oil.
Morgan Stanley lowered its Brent price forecast to $75 a barrel by the end of the year.
“Downside risk from Russian supply and upside risk from Chinese demand have largely manifested and the outlook for a 2H tightening has weakened,” the bank said in a note, referring to buoyant Russian exports. despite Western sanctions.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)