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Brent crude futures fell $1.96, or 2.4%, to $79.25 a barrel by
1:20 p.m. EDT (1820 GMT), while West Texas Intermediate futures
were down $1.52, or 2%, to $74.59 a barrel.
The U.S. Federal Reserve indicated it will raise interest rates
further next year, even as the economy slips toward a possible
recession. On Thursday, the Bank of England and the European
Central Bank also raised interest rates to fight inflation.
"The talk around the campfire has suddenly become all about
demand destruction in the face of a recession," said Robert
Yawger, director of energy futures at Mizuho.
"The economic situation is less than stellar. Not today, but we
are drifting in the direction of testing $70-per-barrel WTI
again, and things could get very ugly from there."
Brent futures are still on pace for their biggest weekly gains
since October after a rally earlier in the week. However, this
week's gains follow the worst weekly rout since August for the
oil benchmark.
Heavy crude benchmarks have strengthened as the Canada-to-U.S.
Keystone pipeline shutdown continues without a timetable for
restart. While the outage is supportive for prices of heavier
crude oil grades, it is "doing nothing" for lighter global
benchmarks, said Matt Smith, lead oil analyst at Kpler.
Oil prices briefly erased some losses after officials said the
U.S. Energy Department will repurchase 3 million barrels of
domestic crude oil for the Strategic Petroleum Reserve, the
first purchase since this year's record 180 million barrel
release from the stockpile.
(Reporting by Shariq Khan, additional reporting by Noah
Browning, Alex Lawler, Muyu Xu; Editing by Muralikumar
Anantharaman, Mark Potter, Louise Heavens and Tomasz Janowski)
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