Oil extends declines on US rate hike concerns
A stronger dollar also capped a lid on oil prices. Powell's comments had propelled the US dollar, which typically trades inversely with oil, to hit a three-month high against a basket of currencies.
Oil prices fell for a second straight session on Wednesday, driven by fears that more aggressive US interest rate hikes would hit demand, while the market awaited further clarity on inventories.
Brent crude futures dipped 22 cents, or 0.3 percent, to $83.07 per barrel by 07:30 GMT. US West Texas Intermediate (WTI) crude futures slid 34 cents, or 0.4 percent, to $77.24 a barrel.
Both Brent and WTI fell by more than 3 percent on Tuesday after comments by US Federal Reserve Chair Jerome Powell that the central bank would likely need to raise interest rates more than expected in response to recent strong data.
"Fed Chair Powell's comments on 'higher for longer' rates spooked markets and sent risk assets, including commodities, sharply down overnight," said Tina Teng, an analyst at CMC Markets.
A short rebound in oil earlier on Wednesday, before a reversal, was probably due to short seller taking profit "as nothing has changed fundamentally," Teng said.
Traders were also awaiting crude inventory data from the US Energy Information Administration later on Wednesday, after the API data showed a decline in crude inventories for the first time after a 10-week build, she said.
Data from the American Petroleum Institute showed US crude inventories fell by about 3.8 million barrels in the week ended March 3, according to market sources.
The drawdown defied forecasts for a 400,000-barrel rise in crude stocks from nine analysts polled by Reuters.
Meanwhile, gasoline inventories rose by about 1.8 million barrels, while distillate stocks rose by about 1.9 million barrels, according to the sources.
A stronger dollar also capped a lid on oil prices. Powell's comments had propelled the US dollar, which typically trades inversely with oil, to hit a three-month high against a basket of currencies.
The dollar index rose as high as 105.65, up 1.3 percent on Tuesday and the highest since Dec. 6.
(Edited by : Sangam Singh)
First Published: Mar 8, 2023 9:02 AM IST
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