Oil down on interest rate hike expectations will reduce fuel ‎demand

Oil extended its losses today, Wednesday, on expectations that the Federal Reserve (the US central bank) will indicate that it will continue to raise interest rates in comments it will issue today, Wednesday, which raises concerns about the decline in economic growth as well as demand for crude.

According to Reuters, Brent crude futures for April delivery fell 23 cents to $82.82 a barrel by 0420 GMT, after falling 1.2 percent on Tuesday. West Texas Intermediate crude futures for April fell 21 cents to $76.15 a barrel. The March WTI contract ended on Tuesday, down 18 cents

The Federal Reserve will release the minutes of its last meeting on Wednesday, which will give dealers a glimpse into how top officials expect interest rates after recent data showed labor market strength and consumer price hikes outperformed expectations.

Dollar tends to rise in light of rising interest rates, which makes the oil in which it is priced more expensive for holders of other currencies.

However, other economic reports from the United States, the world’s largest oil consumer, showed some worrying signs. Existing home sales in January fell to their lowest level since October 2010, the 12th monthly decline, and the longest consecutive period since 1999.

“Increasing recessionary fears are limiting oil prices, but the market is cautiously optimistic about a recovery in demand in China, especially for gasoline and jet fuel,” said Serena Huang, head of analysts for the Asia-Pacific region at Vortex.

On Tuesday, a preliminary poll of Reuters analysts showed a rise in US crude stocks, which increased demand concerns

However, expectations of dwindling global supplies and increased demand from China have supported oil prices recently. Analysts expect China’s oil imports to reach a record level in 2023 to meet growing demand for transportation fuel and as new refineries come online.

This comes at a time when China expects its tourism market to boom this year, starting with a busy and strong summer travel season, as travelers flock to holiday destinations after the government ended coronavirus restrictions that kept people in their homes for nearly three years.

Daniel Hynes, chief commodity analyst at ANZ Bank, said in a note that PetroChina and Unipec, the trading arm of Sinopec, Asia’s largest oil refining company, have booked 10 supertankers to import oil from the United States next month, i.e. Equivalent to about 20 million barrels of crude.