Oil recovers from steep drop but remains below $120 per barrel as Fed hikes interest rates

Oil prices fell more than $3 on Wednesday as markets worried about a fall in demand after the Federal Reserve hiked interest rate by three-quarters of a percentage point — their biggest increase since 1994.

However, prices recovered on Thursday from their steep drop, supported by tight oil supply and peak summer consumption, after the US rate hike sparked fears of slower economic growth and less fuel demand.

Brent crude futures rebounded USD 1.10, or 0.9 percent, to USD 119.61 a barrel by 02:02 GMT while US West Texas Intermediate (WTI) crude futures rose to USD 116.59 a barrel, up to USD 1.28, or 1.1 percent.

Prices slipped more than 2 percent overnight after the Federal Reserve raised the interest rate.

The International Energy Agency (IEA) issued a warning saying that the subdued consumption globally seems to be catching up and the global inventories are building up.

US crude production, which has been largely stagnant over the last few months, edged up 100,000 barrels per day last week to 12 million bpd, its highest level since April 2020, data from the Energy Information Administration showed.  So supplies are getting better but demand is not catching up which seems to be weighing on the prices.

(with input from Reuters)