Oil extended its longest losing streak this year after Federal Reserve minutes showed officials backed further rate hikes, adding to concerns that a U.S. economic slowdown will dampen demand.
The minutes indicated that Federal Reserve officials were more concerned about the risk of inflation remaining high than the economy going into recession. West Texas Intermediate fell below $74 a barrel, its sixth straight drop, shaking off growing evidence of a strong recovery in Chinese demand after the end of Covid Zero rules.
“Crude remains caught in a choppy trading pattern, with rising interest rates and thoughts of a slowing economy keeping downward pressure,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.
Oil’s lackluster start to the year has defied initial optimism that China’s resurgence would boost prices. Morgan Stanley on Wednesday became the latest bank to cut price forecasts, projecting that the market will be oversupplied in the first quarter and balanced in the second, before reaching a deficit in the second half.
In the Brent market, the nearest hourly spread fell sharply on Wednesday. This is a tentative sign of a softer market, although traders often reduce positions in the days leading up to expiration, which is due next week.
Prices:
- WTI for April delivery fell $2.41 to settle at $73.95 in New York
- Brent for April settlement fell $2.45 to settle at $80.60 a barrel
