Oil drops as mounting economic slowdown fears overshadow Putin

Oil dropped after the U.S. Federal Reserve raised interest rates, signaling the market fears the cascading effects of economic slowdown more than potential supply disruptions from Russia’s escalating war.

West Texas Intermediate slipped to settle below US$83 a barrel Wednesday. Crude whipsawed, rising early in the session to as high as US$86 after Vladimir Putin called for substantially more troops to widen the war in Ukraine. Those gains were erased as the Federal Reserve meeting came into focus. The US central bank raised interest rates by 75 basis points for the third consecutive time, a move that could trigger an economic recession.

“Crude prices remained heavy after the Fed signaled they are going to continue to bring down inflation with more rate hikes even as the economy slows,” said Ed Moya, senior market analyst at Oanda.

US crude stockpiles climbed by 1.14 million barrels last week, while a measure of distillate demand -- which includes diesel -- fell to the lowest seasonal level in more than a decade, according to an Energy Information Administration report. The drop in fuel demand comes at a time when consumption typically picks up.