Oil prices rebounded on Thursday after a two-day drop as investors weighed the outlook for demand following another interest-rate hike from the Federal Reserve.
After dropping over 3% in the previous two sessions, West Texas Intermediate futures inched closer to $84 a barrel.
As of 11.10 a.m. Thai time, Brent crude futures gained $0.40, or 0.45%, to $90.23 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $0.33, or 0.40%, to $83.27.
Extreme price movements in oil have been worsened by tight liquidity. As fears persist that a slowing economy could dampen demand, crude has been on course for its first quarterly loss in over two years.
According to analysts at Haitong Futures, the market had already priced in the announcement of a rate hike, so the Fed’s decision didn’t come as much of a shock.
However, due to inventory stock rises and a weakening economic outlook, oil prices remain under selling pressure, according to Citi analysts in a report.
The US Federal Reserve on Wednesday raised its benchmark interest rates by another 75bps and signaled that the central bank will keep raising rates well above the current level to bring down 40-year high inflation.
Fed’s Chairman Jerome Powell said that his main message has not changed since Jackson Hole, and that is the central bank is strongly resolved to bring inflation down to 2%, and will keep at it until the job is done.
The Fed is projected to hike the rate at the next two meetings, 0.75% in November and 0.50% in December, to 4.50% at end-2022.