Oil was little changed on Wednesday after hitting five-week lows in the previous session, as investors priced in expectations for interest rate hikes in the US and Europe and waited for clarity on future policy path.
Brent futures gained 3 cents, or 0.1 percent, to $75.35 a barrel while West Texas Intermediate crude (WTI) edged down 3 cent at $71.63.
Both benchmarks closed at their lowest since March 24 in the previous session, when they also recorded their biggest one-day percentage declines since early January.
“Sentiment in the oil market remains negative,” Warren Patterson and Ewa Manthey, analysts from ING, said in a note to clients. “Investors seem to be getting increasingly nervous about the macro outlook and its implications for oil demand.”
The US Federal Reserve is expected to hike interest rates by an additional 25 basis points on Wednesday to combat inflation, while the European Central Bank is also expected to raise rates at its regular policy meeting on Thursday.
More hikes could slow economic growth and hit energy demand.
“A 25 basis-point rate hike has been fully priced, so focus will be on how Fed Chair Jerome Powell balances between keeping the Fed’s tightening option open and calming nerves around the renewed banking jitters,” Yeap Jun Rong, market analyst at brokerage IG, said in a note.
Regulators seized First Republic Bank and sold its assets to JPMorgan Chase & Co. on Monday, in a deal to resolve the largest US bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil.
In Australia, the central bank stunned markets by hiking its cash rate on Tuesday and warned that further tightening may be needed to combat high inflation.
Concerns about diesel demand in recent months, meanwhile, have pushed down US heating oil futures to their lowest level since December 2021.
Energy prices are also under pressure after data from China over the weekend showed manufacturing activity fell unexpectedly in April. China is the world’s largest energy consumer and top buyer of crude oil. – Reuters
