NextGen Day

Despite statistics from the United States showing a decline in crude stocks, signaling a recovery in demand in the world’s top consuming nation, oil prices fell on Wednesday due to mounting concerns that major central banks will continue their tightening cycle.

At 9:48 a.m. local time (0648 GMT), the price of international benchmark Brent crude was USD84.36 per barrel, down 0.48 percent from the previous trading session’s closing price of USD84.77 per barrel.

West Texas Intermediate (WTI), the American benchmark, was now trading at USD80.53 a barrel, down 0.45% from the session’s closing of USD80.90 per barrel.

The markets are still pricing in a negative scenario where high inflation and rising interest rates will reduce demand for oil.

Fears increased after Raphael Bostic, president of the Atlanta Federal Reserve, suggested “one more interest rate rise” to combat excessive inflation.

“One more move should be enough for us to then take a step back and see how our policy is flowing through the economy, to understand the extent to which inflation is returning back to our target,” said Bostic in an interview.

In an effort to combat record-high inflation that was expected to reach its highest level in more than 40 years by mid-2022, the US Fed raised interest rates by a total of 425 points on seven separate occasions last year.

Later, on February 1 and March 22, it raised rates by a total of 25 basis points, bringing the benchmark funds rate to a range of 4.75 percent to 5 percent.

However, after the American Petroleum Institute (API) reported late Tuesday that US crude oil stockpiles had decreased by an estimated 2.67 million barrels, exceeding the market expectation of a 2.46 million-barrel drop, prospects for demand recovery increased, allaying worries about declining demand.

Later on Wednesday, the US Energy Information Administration (EIA) will release its statistics on oil stocks. If the reduction in stock levels is verified, prices are anticipated to increase.

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