Despite an unexpected fall in US crude inventories, oil prices dropped in early Asia trade on Thursday, with the decline continuing as a result of investors’ concerns that a more hawkish tone from the Federal Reserve would pressure economic growth.
Brent crude futures were down 4 cents to US$82.62 per barrel as of 11.52 A.M. (Thai time), while US West Texas Intermediate (WTI) crude futures slipped 7 cents to US$76.59 a barrel.
On Tuesday, both oil benchmarks fell by more more than 3% after US Federal Reserve Chair Jerome Powell said the central bank will likely need to hike interest rates more than expected in response to recent strong economic data.
But, Powell stated that a decision on rate hikes for the March meeting had not been made.
Despite the unexpected decline in US crude inventories, the mood around further monetary tightening was negative. According to the Energy Information Administration, stockpiles dropped for the first time this year by around 1.7 million barrels last week. Analysts had predicted further increase.
Optimism over China’s economic rebound after the scrapping of Covid Zero and fears of further rate hikes from the Fed have both contributed to a turbulent year for oil. As Asia’s largest economy recovers and Russian production declines, most market observers remain optimistic about future prices. Top trader Trafigura, for example, predicts that Brent will touch $90 a barrel by the middle of the year.
