WTI drops 1% as US recession concerns diminish China recovery hopes

Oil prices fell about 1% on Wednesday, abandoning early gains as worries about a probable US recession outweighed optimism that China’s lifting of COVID-19 curbs will fuel demand for crude in the world’s top oil importer.

Brent futures fell 94 cents, or 1.1%, to settle at $84.98 a barrel. U.S. West Texas Intermediate (WTI) crude fell 70 cents, or 0.9%, to settle at 79.48.

The US session’s high for both benchmarks was the highest since Dec. 5. For WTI, Wednesday was the first time in nine sessions that the contract settled down.

Oil prices reversed gains early in the afternoon along with Wall Street’s main indexes (.DJI), (.SPX), (.IXIC) as hawkish comments from Fed officials sparked worries the central bank may not pause interest rate hikes any time soon.

Markets at first reacted positively to U.S. data, which showed retail sales and manufacturing production declined more than forecast in December, on hopes the Fed would now ease up on interest rate hikes.