Oil Prices Hold Steady after Plummeting 5% as Demand Concerns Rise

Oil prices held stable in early Asian trade on Wednesday, after over 5% loss on Tuesday, as recent data pointed to a further downturn of economic activity in the midst of high interest rates.

Brent oil futures were flat at $75.31 a barrel, while West Texas Intermediate crude futures fell 0.1% to $71.60 a barrel by 11.29 A.M. Bangkok time. 

Following disappointing manufacturing and factory orders data from the United States, the United Kingdom, and the Euro Zone on Tuesday, both contracts dropped more than 5%, hitting their lowest levels since late March.

oil markets, however, regained a little bounce from the previous session, aided by signals of a larger-than-expected decrease in U.S. inventory, as a string of poor manufacturing reports stoked fresh pessimism about a rebound in crude demand this year. 

The American Petroleum Institute (API) reported that U.S. inventories decreased by 3.9 million barrels in the week ending April 28, despite contradictory readings on gasoline and distillate stockpiles indicating a decline in fuel demand.

All eyes are now on the Federal Reserve meeting, which is due to be concluded later today. It is widely anticipated that the central bank will raise interest rates by another 25 basis points. But some are betting that the bank will announce a pause in its rate hike cycle in response to signs of worsening economic activity.

This notion was bolstered by a warning about a possible U.S. debt default.