Crude oil prices drifted lower on Thursday as concerns about the outlook for energy demand resurfaced amid fears of a possible recession due to rising interest rates.
The Organization of the Petroleum Exporting Countries (OPEC) said it expects global oil demand to rise at a slower pace than 2022 in 2023 due to high prices and risks such as inflation.
Fresh Covid-related curbs in several parts of China and the dollar’s sharp uptick also weighed on oil prices.
Oil prices had moved higher on Wednesday despite data showing a jump in crude inventories in the U.S. in the week ended July 8th.
West Texas Intermediate Crude oil futures for August ended lower by $0.52 or about 0.5% at $95.78 a barrel today. WTI futures dropped to a low of $90.56 a barrel in the session before recovering lost ground.
Brent crude futures dropped to a low of $94.52 a barrel today before recovering ground. The contract was last seen hovering around $99.70 a barrel.
After the Bank of Canada hiked interest rates by 100 basis points on Wednesday, the Monetary Authority of Singapore and the Bangko Sentral ng Pilipinas surprised markets by tightening monetary policy in off cycle moves.
It is widely expected that the Federal Reserve will hike interest rates by 75 basis points or 100 basis points at the upcoming meeting later this month.
Data from the Energy Information Administration (EIA) on Wednesday showed crude inventories rose by 3.254 million barrels last week, against expectations for a drop of 154,000 barrels.
Gasoline stockpiles rose by 5.825 million barrels last week, while forecasts were for a drop of 357,000 barrels. Meanwhile, distillate stockpiles increased 2.668 million barrels, against forecasts for a rise of 1.591 million barrels.
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