The Oil prices fell about 4% on Thursday, since a higher-than-expected Bank of England rate hike raised concerns about the economy and fuel demand that offset support from a surprise drop in US crude inventories.
Brent futures were down $2.98, or 3.9%, at $74.14 a barrel. crude oil futures US West Texas Intermediate (WTI) fell $3.02, or 4.2%, to $69.51 a barrel.
The benchmarks erased the gains of the previous sessionduring which US corn and soybean prices reached multi-month highs, raising expectations that crop shortages could reduce the mix of biofuels and increase demand for oil.
On Thursday, the Bank of England raised interest rates by half a percentage point, more than market expectations, to fight stubbornly high inflation. This is the thirteenth consecutive rise of the central bank. Higher interest rates could slow economic growth and reduce demand for oil.
Feeding the caution, the president of the United States Federal Reserve, Jerome Powell, He said two more interest rate hikes of 25 basis points each by the end of the year was “a pretty good estimate.”
On the supply side, US crude inventories fell 3.8 million barrels in the past week to 463.3 million barrels, contrary to analyst expectations in a Reuters poll for a rise of 300,000 barrels.
Gasoline stocks rose about 480,000 barrels for the week to 221.4 million barrels, the Energy Information Administration (EIA) said, compared with analyst expectations in a Reuters poll for a rise of 100,000 barrels.
“Given the drop in oil and the very modest increases in refined products inventories, I would have thought we would get a better response from the market, but the oil and refined products market is just taking a hit from the higher interest rates.” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Source: Ambito
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