Oil prices dropped sharply on Wednesday, sliding by 2% as potential U.S. interest rate hikes that could slow growth and curb oil consumption outweighed strong Chinese economic data and falling U.S. inventories.
Brent crude futures shed $1.70 to $83.07 a barrel by 0929 GMT while West Texas Intermediate U.S. crude fell by $1.64 to $79.22.
The U.S. Federal Reserve is likely to have one more interest rate rise in store, Atlanta Fed President Raphael Bostic said on Tuesday, as the central bank continues to battle inflation.
Markets are pricing in an 86% chance of the Fed raising rates by 25 basis points at its May policy meeting.
In Europe, European Central Bank officials are also wary of inflation and have suggested that interest rates need to continue rising.
“Figures released yesterday pointing to an accelerating Chinese economy failed to provide a launch pad for energy prices to rally,” PVM Oil analyst Stephen Brennock said.
The economy of top crude oil importer China grew by a faster than expected 4.5% in the first quarter and the country’s oil refinery throughput rose to record levels in March, data showed.
U.S. crude stocks, meanwhile, fell by about 2.68 million barrels last week, market participants citing American Petroleum Institute figures said on Tuesday. Gasoline and distillates inventories also fell last week, they said.
The official inventory report by the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due to be released at 1430 GMT on Wednesday.
Adding more pressure on oil benchmarks, Asian refiners have continued to snap up Russian crude in April. India and China have bought the vast majority of Russian oil so far in April at prices above the Western price cap of $60 a barrel, according to traders and Reuters calculations.
