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Brent crude futures fell 80 cents, or 0.8%, to $94.84 a barrel
by 0626 GMT. U.S. West Texas Intermediate (WTI) crude futures
slid 85 cents, or 1%, to $88.70 a barrel.
"Growing fears over weakening fuel demand due to aggressive rate
hikes by the U.S. and European central banks outweighed concerns
over tight global supply," said Hiroyuki Kikukawa, general
manager of research at Nissan Securities.
Recent signs of weakness in China's economy and the country's
stronger pandemic restrictions also weighed on sentiment, he
added.
"The tug-of-war market reflecting sluggish demand outlook and
tight supply estimates is expected to continue going forward,"
Kikukawa said.
China's factory activity contracted for the first time in three
months in August amid weakening demand, while power shortages
and fresh COVID-19 flare-ups disrupted production, a private
sector survey showed.
Southern Chinese tech hub Shenzhen tightened COVID-19 curbs as
cases continued to mount, with large events and indoor
entertainment suspended for three days in the city's most
populous district, Baoan.
Recent oil market volatility has followed concerns about
inadequate supply in the months after Russia sent military
forces into Ukraine and as OPEC struggles to increase output.
However, production in both the Organization of the Petroleum
Exporting Countries (OPEC) and the United States has risen to
its highest level since the early days of the coronavirus
pandemic.
OPEC's output hit 29.6 million barrels per day (bpd) in the most
recent month, according to a Reuters survey, while U.S. output
rose to 11.82 million bpd in June. Both are at their highest
levels since April 2020.
Still, the oil market will have a small surplus of just 0.4
million bpd in 2022, much less than forecast earlier, according
to OPEC and its partners - known as OPEC+ - due to
underproduction of its members, OPEC+ sources said.
Meanwhile, U.S. crude stocks fell by 3.3 million barrels, the
U.S. Energy Information Administration said on Wednesday, while
gasoline stocks were down 1.2 million barrels.
Finance ministers from the Group of Seven club of wealthy
nations will discuss the U.S. Biden administration's proposed
price cap on Russian oil when they meet on Friday, the White
House said.
(Reporting by Yuka Obayashi and Laura Sanicola; Editing by
Richard Pullin and Christopher Cushing)
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