Oil prices saw a slight decrease on Wednesday following indications of weak demand and the anticipation of a crucial interest rate decision by the U.S. Federal Reserve.
Brent crude oil, which had risen almost 3% earlier in the week, fell by 0.40% to $75.02 a barrel, while U.S. West Texas Intermediate (WTI) crude oil was down 0.42% at $69.38.
Data from the American Petroleum Institute released on Tuesday put the demand for oil into question after revealing an unexpected increase in U.S. crude inventories, contradicting analyst predictions of a decline.
Oil prices were also impacted by an unexpected rise in UK inflation in February, raising concerns of more interest rate hikes a day before the Bank of England’s latest interest rate decision.
The global market is waiting to assess the decision of the U.S. Federal Open Market Committee (FOMC) on interest rates later today to decipher the future direction of price action.
While the expected 25 basis point rate hike was a turnaround from the previously anticipated 50 basis point rate rise, analysts predict that it won’t have a significant impact on oil prices.
Craig Erlam, senior market analyst at OANDA, said, “It would be a big shock if the Fed reverted back to larger rate hikes now considering everything that’s happened this past couple of weeks.”
Last week, Brent prices hit their lowest levels since 2021 on concerns that the drop in bank shares could lead to a global recession and reduced fuel demand.