Oil fell after two days of gains as the specter of U.S. rate hikes dampened trader sentiment.
West Texas Intermediate was holding just under US$76 a barrel, paring losses after dropping almost 2%. Poland’s largest oil company, PKN Orlen SA, unexpectedly stopped receiving crude via the Druzhba pipeline from Russia. At the same time, strong inflation data has scared some traders that the Federal Reserve will keep raising rates, which would impede crude demand as the economy slows.
“Oil prices are lower as Wall Street anticipates bond yields will continue to rise higher, which should trigger multiple recessions,” said Ed Moya, a senior market analyst at Oanda. “Energy traders are fixated with the crude demand outlook and that is why the halting of a Russian pipeline to Poland is not sending prices higher.”
Crude has traded within a tight US$10 range so far this year as investors weigh a welter of conflicting forces, including the outlook for supplies from Russia, China’s reopening and the trajectory of monetary policy.
The market’s prospects will come into focus over the coming days as traders congregate in London for International Energy Week, one of the industry’s marquee events.
Prices:
- WTI for April delivery fell 38 cents to US$75.95 a barrel at 10:20 a.m. in New York.
- Brent for April settlement shed 52 cents to US$82.64 a barrel.
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