Oil falls, as expectations of a rate hike overshadowed the decline in US inventories

Oil prices fell on Wednesday as the market assessed the possibility of the Federal Reserve raising interest rates which could slow growth and reduce oil consumption, which was offset by falling US inventories and strong Chinese economic data.

And by 0641 GMT, Brent crude futures fell 35 cents, or 0.4 percent, to $ 84.42. US West Texas Intermediate crude also fell 33 cents, or 0.4 percent, to $80.53 a barrel.

Atlanta Fed President Raphael Bostick said on Tuesday that the US central bank will likely make another interest rate hike to fight inflation.

Markets see an 86 percent chance that the Federal Reserve will raise interest rates by 25 basis points at its policy meeting in May.

Prices received support after market sources quoted the American Petroleum Institute as saying that US crude stocks fell by about 2.68 million barrels in the week ending April 14.

An official inventory report from the Energy Information Administration is due at 1430 GMT on Wednesday.

Meanwhile, data showed that China’s economy, the largest importer of crude oil, grew more than expected at 4.5 percent in the first quarter.