Oil falls nearly 3% as investors watch on US Fed rate hike

A sticker reads crude oil on the side of a storage tank in the Permian Basin in Menton, Loving County, Texas, US November 22, 2019. Image taken on November 22, 2019. REUTERS/Angus Mordant/

NEW YORK, June 22 (Reuters) – Oil prices fell nearly 3% on Wednesday as investors worried that a rate hike by the Federal Reserve could push the US economy into a recession, easing demand for the fuel. .

Brent crude futures fell $2.91, or 2.5%, to $111.74 a barrel. The global benchmark settled at a session low of 107.03, the lowest level since May 19.

US West Texas Intermediate (WTI) fell $3.33, or 3%, to $106.19 a barrel. The session’s low was $101.53, the lowest level since May 11.

Investors on Wednesday assessed how a hike in interest rates to pacify rising inflation could stall the economic recovery. read more

Although oil prices narrowed the deficit, Fed Chair Jerome Powell promised “extreme focus” on reducing inflation and reiterated that the central bank’s ongoing policy rate hikes should be based on momentum based on the economic outlook. would be appropriate.

“Powell changed the market mood by being confident about the US economy,” said Price Futures analyst Phil Flynn. “His words have calmed the market and kept prices down in the short term.”

Meanwhile, US President Joe Biden called on Congress to pass a three-month suspension of the federal gasoline tax to help tackle record pump prices and provide temporary relief for American families this summer. read more

While lower pump prices could actually boost fuel demand and support crude oil prices, PVM analyst Stephen Brennock said traders may be concerned that the Biden administration will try more to calm higher energy prices. can remedy.

Lawmakers from both major parties have opposed the suspension of the federal gasoline tax.

The White House asked the chief executives of seven oil companies in a meeting on Thursday to discuss ways to increase production capacity and reduce gasoline prices by about $5 a gallon.

Biden has publicly criticized Big Oil for banking huge profits, but he has rarely spoken directly to the heads of energy companies or their representatives, White House records and interviews with industry sources show. read more

Chevron (CVX.N) CEO Michael Wirth said criticizing the oil industry was not the way to reduce fuel prices and the government should change its approach. Biden replied that he was unaware that oil executives “could hurt their feelings so easily.” read more

US refining capacity fell for the second year in a row in 2021, government data showed, as plant closures impacted their ability to produce gasoline and diesel. read more

U.S. crude stocks rose nearly 5.6 million barrels last week, gasoline inventories rose 1.2 million barrels, while distillate stocks rose nearly 1.7 million barrels, according to market sources citing data from the American Petroleum Institute on Wednesday. million barrels.

The US Energy Information Administration said its weekly oil data, which was scheduled for release on Thursday, would be delayed until at least next week due to system issues. It was not clear when the EIA would publish the report.

The $2.4 trillion to be invested globally in energy this year includes record spending on renewable energy, but is lacking in bridging the supply gap and tackling climate change, the International Energy Agency said. read more

Reporting by Stephanie Kelly; Additional reporting by Shadia Nasralla, Sonali Paul and Mohi Natyan; Editing by Marguerita Choy and David Gregory

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