(Bloomberg) -- Oil held a hefty loss after Federal Reserve Chair Jerome Powell signaled interest rates could rise higher and faster than previously anticipated, raising concerns about the economy and energy demand.
West Texas Intermediate futures edged lower near $77 a barrel after posting the biggest one-day decline since early January. The remarks, made during a testimony before Congress, opened the door to the Fed lifting interest rates by half a percentage point at this month’s meeting and weighed on equity markets on Wednesday.
Adding to the bearishness, OPEC Secretary-General Haitham Al-Ghais said that slowing oil consumption in Europe and the US poses a concern, even as Asia experiences “phenomenal” growth. Citigroup Inc. said that global supply is ample and demand remains low.
Before the Powell-driven selloff, oil had been trading at the highest level since late January. Prices also eased after China this week set a cautious economic growth target for 2023, denting some of optimism about a major revival in demand from the world’s biggest oil importer.
“The most inverted US yield curve in decades now signals an even bigger risk of a recession and with that weakening demand for fuel,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Overall, I see crude oil thoroughly stuck with no clear direction for months now.”