Thursday’s early Asian trading saw oil prices fall further as investors looked at the prospects for demand this year amid slowing global growth and rising wagers on additional rate hikes from major central banks.
As of 10:14 AM (Bangkok time), Brent oil futures dropped 0.93% to $82.35 per barrel, while West Texas Intermediate crude futures slid 0.87% to $78.47 per barrel. On Wednesday, both contracts fell over 2%, with U.S. crude oil prices dipping below the crucial $80 per barrel mark.
Dollar strength after numerous hawkish statements from Federal Reserve officials also weighed on oil prices.
On Wednesday, President John Williams of the Federal Reserve Bank of New York was the latest senior central bank officer to call for further rate hikes, saying that inflation is still at concerning levels and the Fed will act to control it. Future raises, he added, will be determined by economic data.
According to Fed fund futures, the market expects the central bank to raise rates by 25 basis points in May, with an increasing number of spectators also expecting a hike in June.
This notion weighed heavily on crude prices due to the fact that rising interest rates and sluggish economic growth increase the likelihood of a recession this year, which could significantly reduce demand. The markets also are worried that the demand recovery in Asia, led by China, may not be enough to counteract the slowing growth in the west.