Oil prices fell for a third trading session on Wednesday as concerns about fuel demand were stoked by expectations that minutes due from the U.S. Federal Reserve will indicate a need to hike interest rates.
Brent crude futures for April delivery fell $1.13, or 1.36 per cent, to $81.92 a barrel by 1025 GMT. West Texas Intermediate (WTI) crude futures for April dropped by $1.18, or 1.55 per cent, to $75.18 a barrel.
The U.S. Fed will release the minutes of its latest meeting on Wednesday, which will give traders a glimpse of how high officials are projecting interest rates will go after recent data showed stronger-than-expected U.S. employment and consumer prices.
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 U.S., 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 U.S. crude inventories, exacerbating the 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 U.S. next month, equal to about 20 million barrels of crude, as signs of rising Chinese demand. China is the world’s largest oil importer.
Morgan Stanley has raised its estimate for oil demand growth this year to 1.9 million bpd from 1.4 million bpd previously, but lowered its Brent price forecast for July-December.