Oil is falling on expectations that the interest rate hike will reduce fuel demand

Oil extended its losses on Wednesday on expectations that the Federal Reserve will signal that it will continue to raise interest rates in comments it will issue on Wednesday, raising concerns about slowing economic growth as well as demand for crude.

Brent crude futures for April delivery were down 23 cents at $82.82 a barrel by 0420 GMT, after falling 1.2 percent on Tuesday. West Texas Intermediate crude futures for April fell 21 cents to $76.15 a barrel. The March WTI contract expired on Tuesday, down 18 cents.

The Federal Reserve will release the minutes of its last meeting on Wednesday, which will give dealers a glimpse into how top officials expect interest rates after recent data showed labor market strength and consumer price hikes outperformed expectations.

And the dollar tends to rise in light of rising interest rates, which makes oil in which it is denominated more expensive for holders of other currencies.

However, other economic reports from the United States, the world’s largest oil consumer, showed some worrying signs. Existing home sales in January fell to their lowest level since October 2010, the 12th monthly decline, and the longest straight period since 1999.

On Tuesday, a preliminary poll of Reuters analysts showed a rise in US crude stocks, which added to demand concerns.

But expectations of dwindling global supplies and increased demand from China have supported oil prices recently. Analysts expect China’s oil imports to reach a record level in 2023 to meet growing demand for transportation fuels and as new refineries come online.

It comes as China expects its tourism market to boom this year, starting with a busy and robust summer travel season, as travelers flock to holiday destinations after the government ended coronavirus restrictions that kept people indoors for nearly three years.