Oil prices traded lower on Wednesday, extending losses after U.S. government data pointed to weak demand, which exacerbated fears that more aggressive U.S. interest rate hikes would pressure economic growth.
Brent crude futures were down $1.07 cents, or 1.3%, to $82.28 per barrel at 11:19 a.m. ET (16:19 GMT). U.S. West Texas Intermediate (WTI) crude futures slipped $1.19, or 1.5%, to $76.37 a barrel.
U.S. gasoline stocks drew by 1.1 million barrels, according to a report from the U.S. Energy Information Administration, lower than the 1.8 million estimated in a Reuters poll. Distillate inventory grew by 138,000 barrels, compared with expectations for a 1 million barrel draw.
Crude stocks drew 1.7 million barrels, compared with estimates for a build of 395,000. American Petroleum Institute (API) data on Tuesday showed a decline in crude inventories for the first time after a 10-week build.
Both Brent and WTI fell by more than 3% on Tuesday after comments by U.S. Federal Reserve Chair Jerome Powell that the central bank would likely need to raise interest rates more than expected in response to recent strong data.
A stronger dollar also capped oil prices earlier in the session. Powell’s comments had propelled the U.S. dollar, which typically trades inversely with oil, to hit a three-month high against a basket of currencies.
U.S. private payrolls increased more than expected in February, pointing to continued labor market strength. Barclays lowered its 2023 Brent forecast by $6 to $92 a barrel and WTI by $7 to $87, “due primarily to more resilient-than-expected Russian supplies,” the bank said.
“[We] expect the continued recovery in civil aviation demand in China and neighboring countries, a stabilization in industrial activity and slower non-OPEC+ supply growth to drive the oil market balance into a deficit later this year,” the bank added