On Wednesday, international oil prices continued to fall, extending the decline from the previous trading day as traders worried about the Federal Reserve's upcoming interest rate decision amid economic uncertainty.
At the time of writing, WTI crude oil futures had expanded their decline to 5%, trading at $68.06 per barrel, dropping over 10% this week; Brent crude oil futures fell 4.73% to $71.76 per barrel, the lowest level since March 20.
The day before, concerns about the economy also dragged WTI and Brent crude oil futures down by 5%, marking the largest single-day decline since early January, as the market worried that an economic recession would affect energy demand.
Rystad Energy analysts wrote that if the Federal Reserve implies further rate hikes in the future, oil prices could fall further, with weak oil prices also weighing on energy stocks.
PVM Oil analyst Stephen Brennock stated, "The Federal Reserve is expected to hike interest rates by another 25 basis points later, as part of its long-term strategy to combat inflation." He added that concerns about the health of the US banking sector and strong "small non-farm" employment data failed to dispel investor concerns about the US economy sliding into recession.
In addition, data from the US Energy Information Administration showed that US gasoline inventories unexpectedly increased by 1.7 million barrels last week, while analysts had expected a decrease of 1.2 million barrels.
US demand for automobile fuel has declined significantly ahead of the summer driving peak, indicating that consumers are limiting their gasoline spending.
Morgan Stanley has lowered its year-end price forecast for Brent crude oil to $75 per barrel, believing that the prospect of tight supply in the second half of the year has weakened and the risk of a decline in Russian supply has virtually disappeared.
Days after OPEC+ member countries began cutting production, there are signs that supply remains ample while demand continues to disappoint.
In response to the continuous decline in oil prices, Russian Deputy Prime Minister Novak said that a detailed study of the oil price drop is needed to determine possible OPEC+ countermeasures. He added that the decline in oil prices may be short-term.
