Oil capped its longest string of daily losses this year as hawkish signals from Federal Reserve officials added to concerns about a glut of crude piling up in storage.

A significant increase in U.S. inventories and a broader risk-off sentiment sparked by the prospect of continued rate hikes from the Fed have weighed on oil this week. The headwinds were exacerbated by the federal government’s plan to continue drawing down the country’s Strategic Petroleum Reserve, with 26 million more barrels set to be released into the market.

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Crude has been stuck in a narrow channel since early December. Expectations that China’s return from COVID-19 lockdowns will boost global demand are being tempered by a U.S. economy that’s threatening to tilt into a recession under the weight of Fed hikes.

“The renewed rangebound trade in oil is causing the market to become wary, demanding more cyclical evidence to invest in the structural bull case,” Goldman Sachs Group Inc. analysts led by Jeff Currie wrote in a note to clients. 

Prices:

  • WTI for March delivery fell US$2.15 to settle at US$76.34 a barrel in New York.
  • Brent for April settlement fell US$2.14 to settle at US$83 a barrel.