Oil retreats on fears linked to rate hiking, tighter US stockpiles

Airlines cancelled nearly 2,000 US flights scheduled for Thursday and Friday in the United States, disrupting holiday travel for thousands and sending a bearish signal for travel fuel demand.

Also keeping a lid on prices was a rising U.S. dollar and fall in equities, said Jim Ritterbusch of Ritterbusch and Associates, along with demand worries stemming from China’s COVID-19 surge.

Crude oil retreated by $1 a barrel on Thursday in a volatile trading session as result of the impact of tighter US crude stockpiles due to winter storms in the United States, in addition to fears linked to Fed’s interest rate hiking as well as China’s rising COVID-19 infections. All these factors together have impacted energy demand.

Brent crude futures settled at $80.98 a barrel, losing $1.22, while 1.5%. WTI crude futures settled at $77.49, falling by 80 cents, or 1%. Both benchmarks rose by $1 per barrel earlier in the session.

Crude oil abandoned its daily gains following the US economic data indicating that the number of people having filed new claims for unemployment benefits increased less than expected last week and that the country’s economy rebounded faster than previously estimated in Q3.

The data increased concerns the Fed was more likely to strengthen its rate hikes in a move that may have as a side effect potential economic slowdown and this could in turn impact fuel consumption.