Washington, DC, April 19 (BNA): Oil drifted lower on Wednesday as the prospect of an interest rate hike from the Federal Reserve that could slow growth and reduce oil consumption, offsetting lower US inventories and strong Chinese economic data weighed on the market.
Brent crude futures fell 7 cents to $84.70 a barrel at 0320 GMT. US West Texas Intermediate crude fell 5 cents to $80.81 a barrel.
Atlanta Federal Reserve Chairman Rafael Bostick said on Tuesday that the US Federal Reserve likely has another rate hike to fight inflation.
Markets estimate an 86% chance that the Fed will raise interest rates by 25 basis points at the May meeting.
Prices got a boost from an industry report that showed US crude inventories fell by about 2.68 million barrels in the week ending April 14, according to market sources citing American Petroleum Institute figures on Tuesday. The sources said that gasoline and distillate stocks fell last week.
The official inventory report is due by the Energy Information Administration, the statistical arm of the US Department of Energy, at 1430 GMT on Wednesday.
Meanwhile, the economy of China, the largest importer of crude oil, grew by 4.5% in the first quarter, while the country’s oil refinery output rose to record levels in March, the data showed.
Brian Martin and Danielle Haynes, analysts from ANZ Research, said in a note.
“But this is offset by weakness elsewhere,” they said, referring to the decline in diesel and jet fuel refining margins, which indicates a decline in global demand.
Distillates and gasoline splits from Asia to Europe are weak amid slowing demand and oversupply of products in the market.
WWA