NEW YORK — Oil prices fell on Wednesday after the U.S. Federal Reserve delivered another hefty rate hike to quell inflation, but that may also reduce economic activity.
The Fed raised its target interest rate by three-quarters of a percentage point to a range of 3.00-3.25% and signaled more big increases ahead. Risk assets like stocks and oil fell, while the dollar rallied.
Brent futures fell 54 cents, or 0.6%, to $90.08 a barrel by 2:15 p.m. EDT (1815 GMT), while U.S. West Texas Intermediate (WTI) crude fell 71 cents, or 0.9%, to $83.23.
That would be the lowest closes for both benchmarks since Sept. 8.
U.S. gasoline demand over the past four weeks fell to 8.5 million barrels per day (bpd), its lowest since February, according to the U.S. Energy Information Administration (EIA).
“The stand-out data point is the continuing weakness in gasoline demand. It’s really what’s been haunting this market,” said John Kilduff, partner at Again Capital LLC in New York.
The U.S. Energy Information Administration reported a 1.1 million barrel increase in crude stocks last week, smaller than the 2.2 million barrel build forecast in a Reuters poll.
Analysts at energy consulting firm Ritterbusch and Associates said oil prices rose early in the session “largely off Putin’s apparent escalation of the Ukraine war,” but were being held down by a “strong dollar and expected higher U.S. interest rates.”
Russian President Vladimir Putin called up 300,000 reservists to fight in Ukraine and backed a plan to annex parts of the country, hinting he was prepared to use nuclear weapons.
U.S. President Joe Biden accused Russia of making “reckless” and “irresponsible” threats to use nuclear weapons.
(Additional reporting by Ahmad Ghaddar in London, Yuka Obayashi in Tokyo, Isabel Kua and Florence Tan in Singapore and Laila Kearney in New York; Editing by David Gregorio and Kirsten Donovan)