Oil prices extended losses on Wednesday after plunging 5% in the previous session, as investors fretted about the health of the U.S. economy ahead of an expected Federal Reserve interest rate hike later in the day.
Brent futures fell $1.99, or 2.64%, to $73.33 U.S. a barrel, while West Texas Intermediate crude (WTI) fell $2.03, or 2.83%, to $69.63.
Both benchmarks closed at their lowest since late March in the previous session, when they also recorded their biggest one-day percentage declines since early January.
The Fed 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.
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.
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.
The reopening of China’s economy will be pivotal for Asia, the International Monetary Fund said as it raised its economic forecast for the region on Tuesday. But it warned of risks from persistent inflation and global market volatility driven by Western banking-sector woes.
Meanwhile, U.S. crude stockpiles fell for a third week in a row for the first time since December, down some 3.9 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday.
A Reuters survey found that OPEC oil output fell 190,000 barrels-per day in April, mainly driven by Iraq and Nigeria. Output is set to drop further in May as a new round of voluntary cuts unveiled on April 2 takes effect.
Morgan Stanley lowered its forecast for Brent prices to $75 U.S. a barrel by year-end.
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