Sep 07, 2022 03:01AM ET
By: AnalysisWatch
Oil prices fell more than $1 on Wednesday, hitting their lowest level since before Russia's invasion of Ukraine, as COVID-19 restrictions in China, the biggest oil importer, and expectations of further interest rate hikes fueled fears of a global economic recession and lower fuel demand.
After falling 3 percent in the previous session, Brent crude futures fell $1.08, or 1.2 percent, to $91.75 a barrel by 0644 GMT. The contract hit a session low of $91.20, the lowest since Feb. 18.
U.S. West Texas Intermediate crude futures lost $1.20, or 1.4%, to $85.68. The benchmark fell to a session low of $85.08, the lowest since Jan. 26.
Oil pared strong gains made on Monday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, decided in October to cut production by 100,000 barrels a day.
Exports and imports lost momentum in August, with growth falling well short of forecasts. Crude imports fell 9.4% in August from a year earlier, customs data showed on Wednesday, as shutdowns at state-owned refineries and lower operations at independent plants due to weak margins curbed purchases.
Investors are also eyeing further interest rate hikes to curb inflation. The European Central Bank is widely expected to raise rates significantly at its meeting on Thursday. The ECB meeting will be followed by the US Federal Reserve meeting on 21 September.
However, some support for prices was provided by expectations that oil inventories in the United States would be reduced.
A preliminary Reuters poll on Tuesday showed that US crude inventories fell for the fourth week in a row, as expected, and were estimated to have fallen by 733,000 barrels in the week to September 2.
Crude oil inventories in the US Strategic Petroleum Reserve (SPR) fell by 7.5 million barrels to 442.5 million barrels in the week to September 2, the lowest since November 1984, according to the Department of Energy.