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U.S. Federal Reserve Chair Jerome Powell's comments this week on
the likelihood that interest rates will need to be raised more
than previously expected in response to recent strong data
continued to weigh on oil and other risk assets because of the
potential impact on economic and demand growth.
Brent crude fell by 34 cents, or 0.4%, to $82.32 a barrel by
0902 GMT while U.S. West Texas Intermediate (WTI) crude slipped
by 11 cents to $76.55. Both benchmarks declined between 4% and
5% over the previous two days.
"Fears of recession are conspicuously rising," said Tamas Varga
of oil broker PVM.
Oil prices on Tuesday registered their largest daily fall since
early January after Powel's comments.
"Oil prices are still under the influence of Powell's hawkish
tone," said Suvro Sarkar, lead energy analyst at DBS Bank,
pointing to the possibility of a 50 basis points rate hike
rather than 25 basis points.
There was some support for oil from Wednesday's official figures
on U.S. crude inventories, which fell 1.7 million barrels last
week to end a 10-week run of increases. That compared with
expectations in a Reuters poll for a 400,000 barrel increase.
Oil has also drawn support from expectations of rising Chinese
demand.
While China's crude oil imports in the first two months of 2023
fell 1.3% year on year, analysts pointed to accelerating imports
in February as a sign that fuel demand was rebounding after
Beijing scrapped COVID-19 controls.
(Reporting by Alex Lawler in LondonStephanie Kelly and Emily
Chow in SingaporeEditing by David Goodman)
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