Oil prices experienced a second consecutive decline, putting them on track for a weekly decrease of over 3 percent, due to concerns about demand sparked by a higher-than-expected interest rate hike in Britain and warnings of impending rate increases in the U.S.
Brent futures dropped by 0.8 percent, or 56 cents, to $73.58 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell by 0.9 percent, or 60 cents, to $68.91 at 0655 GMT.
Tina Teng, an analyst at CMC Markets, stated “Recession fears mount again following central banks’ rate hikes and a hawkish Fed,” also noting that a stronger dollar was negatively impacting prices.
READ: UK set to dodge recession, but big problems remain -CBI
An increase in the value of the dollar, which rose by 0.3 percent this week, can reduce oil demand by making fuel more expensive for holders of other currencies.
In the previous session, both crude benchmarks dropped by about $3 after the Bank of England raised interest rates by half a percentage point, leading to concerns about an economic slowdown affecting fuel demand.
The market is currently waiting for the release of Purchasing Managers Indexes (PMIs) from around the world on Friday, which will provide insights into manufacturing activity and demand trends.
The Energy Information Administration reported on Thursday that U.S. crude stocks unexpectedly decreased in the last week, attributed to strong export demand and low imports. However, gasoline and distillate inventories increased.
Federal Reserve Chair Jerome Powell stated that the central bank will proceed with interest rate hikes at a “careful pace” as policymakers move closer to ending their historic round of monetary policy tightening.
READ: Powell: Half-point of additional hikes a ‘good guess’ of policy outcome
Higher interest rates increase borrowing costs for businesses and consumers, potentially slowing economic growth and reducing oil demand. Concerns about rate hikes by major central banks have cast a cloud over the fuel demand outlook for the remainder of the year.
“Energy traders are worried that the Fed and friends might cripple economic growth in the second half of the year,” noted Edward Moya, an analyst at OANDA.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
