Oil fell for the third day as recession fears increased

Oil fell for the third day in a row on Thursday, as concerns about the economic repercussions of higher interest rates offset the impact of an unexpected drop in US crude inventories and hopes for a recovery in Chinese demand.

Federal Reserve Chairman Jerome Powell’s comments this week about the potential need to raise interest rates more than expected after the recent strong data weighed on oil and other risk assets due to the potential repercussions on economic growth and demand growth.

By 0902 GMT, Brent crude futures were down 34 cents, or 0.4 percent, at $82.32 a barrel. West Texas Intermediate crude futures fell 11 cents to $76.55 a barrel. The two benchmarks have fallen between 4 and 5 percent over the past two days.

On Tuesday, oil futures fell more than 3 percent, and incurred their biggest daily loss since early January, after Powell’s comments.

Although China’s crude imports fell 1.3% in the first two months of 2023 on an annual basis, analysts pointed to the increase in imports in February as a sign of recovery in fuel demand after China lifted anti-Covid-19 restrictions.

Meanwhile, data from the US Energy Information Administration revealed on Wednesday that US crude inventories fell by 1.7 million barrels last week, missing analysts’ expectations for an increase of 395,000 barrels and ending a 10-week streak of increase.