LONDON: Oil prices fell on Wednesday as concerns about fuel demand were stoked by expectations minutes of the US Federal Reserve’s most recent policy meeting due later in the day would indicate a need for higher interest rates.
Brent crude futures for April delivery were down 79 cents, or 0.95 percent, to $82.26 a barrel at 1452 GMT. West Texas Intermediate crude futures for April dropped by 68 cents, or 0.89 percent, to $75.68 a barrel.
The minutes from the Federal Reserve’s last policy meeting are expected to give traders a glimpse how much further interest rates may need to rise to slow inflation and cool an economy that has remained stronger than expected despite monetary tightening.
Higher interest rates tend to lift the dollar, making dollar-denominated oil more expensive for holders of other currencies and reducing demand.
Other economic reports from the US, the world’s biggest oil consumer, showed some troubling signs however. Sales of existing homes fell in January to their lowest since October 2010.
A preliminary Reuters analyst poll on Tuesday also showed a rise in US crude inventories, exacerbating demand worries.
The economic outlook across Europe, however, continues to show resilience, UBS said in a note. This followed business surveys released on Tuesday which showed surprisingly strong growth.
Expectations of tighter global supplies and rising demand from China also cushioned overall price weakness.
Analysts expect China’s oil imports to hit a record high in 2023 to meet increased demand for transportation fuel and as new refineries come on stream.
In a note on Wednesday, Daniel Hynes, senior commodity strategist at ANZ Bank, pointed to state-owned PetroChina and Unipec booking 10 supertankers to import oil from the US next month, equal to about 20 million barrels of crude, as signs of rising Chinese demand. China is the world’s largest oil importer.