Oil prices fall about 3% on US interest rate hike fears

The prices of Petroleum fell to three-week lows on Friday in a volatile session after strong US jobs data USA raised concerns about rates of fees higher and as investors sought more clarity on the EU’s impending embargo on Russian refined products.

Brent crude futures fell $2.23, or 2.7%, to settle at $79.94 a barrel after touching a session high of $84.20. It hit a session low of $79.72, the lowest since Jan. 11.

US crude oil (WTI) closed down $2.49, or 3.3%, at $73.39 after trading between $78 and $73.13, the lowest since January 5.

Brent is down 7.8% this week, while WTI is down 7.9%.

US job growth accelerated sharply in January amid a persistently resilient job market, but further moderation in wage gains should give the Federal Reserve some comfort in its fight against inflation.

“The market can’t decide whether to be nervous about a recession or more concerned about how aggressive the Federal Reserve is on interest rates,” said Phil Flynn, an analyst at Price Futures Group.

The US central bank raised rates more leniently than last year, but policymakers also projected that “continued increases” in borrowing costs would be needed.

Interest rate hikes in 2023 are likely to weigh on the US and European economies, raising fears of an economic slowdown that is likely to hit global demand for crude oil, said Priyanka Sachdeva, market analyst at Phillip Nova.

The Kremlin said an EU embargo on refined products from Russia would lead to further imbalance in global energy markets.

Meanwhile, ANZ analysts noted a sharp jump in traffic in China’s 15 biggest cities after the Lunar New Year holiday, but said Chinese merchants were “relatively absent”.