Oil held the losses it incurred over the past two sessions as the Federal Reserve continued to express a hawkish tone despite a sudden decline in U.S. crude inventories. West Texas Intermediate fell by almost 5% over the past two days and is now trading at $77 per barrel.
Federal Reserve Chair Jerome Powell remarked during a congressional testimony that while a decision has not yet been made about the March meeting, the central bank is likely to boost interest rates higher than expected.
Powell’s cautious economic outlook overshadowed news of U.S. crude inventories experiencing an unexpected decline. The Energy Information Administration reported that stockpiles dropped by about 1.7 million barrels last week to mark the first decline of the year. This is in contrast to the rise that was expected by analysts.
“The thesis of economic weakness dragging global demand down is back in the picture,” Sean Lim, an oil and gas analyst at RHB Investment Bank Bhd, observed. “The outlook for China is still bullish, but it may take a relatively longer time frame for demand to ramp up.”