Oil fell on Wednesday as the market expected interest rate hikes by the United States Federal Reserve. Which might stall growth and lower oil consumption, offsetting dropping US inventories and good Chinese economic data.
Brent crude futures were droppe $1.61, or 1.88%, at $83.19 a barrel at 16:45 IST. West Texas Intermediate crude in the United States slipped $1.57 , or 1.94%, to $79.33 per barrel.
The Federal Reserve of the United States is expect to raise interest rates again to combat inflation. According to Atlanta Fed President Raphael Bostic on Tuesday.
Markets expect the Fed to hike interest rates by twenty-five basis point at it May policy meeting.
In Europe, central bank authorities are similarly concerned about inflation and believe interest rates must continue to rise.
Oil prices rose on Tuesday after an industry study showed that US crude stocks declined by 2.68 million barrel in the week ending April 14. According to market participants quoting American Petroleum Institute numbers. According to the sources, petrol and distillate inventories declined last week as well.
Meanwhile, China’s GDP grew at a faster-than-expected 4.5 percent in the 1st quarters. While the countries oil refinery throughput reached record levels in March, according to data.
“The market has been waiting to see how China’s reopening has affected demand.”
The reality that its economy is expanding at its quickest rate in a year should speak well for demand in the coming months, according to ANZ analysts Brian Martin & Daniel Hynes in a client note.
“However, this is being offset by weaknesses elsewhere,” they wrote, alluding to falling diesel and jet fuel refining margins, which show global demand is dropping.
Distillates and petrol cracks are weak from Asia to European due to sluggish demand and rising product inventories.
Asian refiners’ continued seizure of Russian crude in April is exerting additional pressure on oil benchmarks.
According to traders and estimations, India and China have purchased the great bulk of Russian oil so far in April at rates higher than the Western prices cap of $60 per barrel.