By Scott DiSavino
NEW YORK (Reuters) -Oil prices fell about 1% to a one-week low on Wednesday after the U.S. Federal Reserve left interest rates unchanged as widely expected, but stiffened its hawkish stance with a further rate increase projected by the end of the year.
Brent futures for November delivery fell 81 cents, or 0.9%, to settle at $93.53 a barrel, while U.S. West Texas Intermediate crude (WTI) for October delivery fell 92 cents, or 1.0%, to settle at $90.28.
That was the lowest close for Brent since Sept. 13.
The WTI contract for October expires on Wednesday. WTI crude futures for November, which will be the next front-month, was down about 82 cents to $89.66.
Despite the price decline, Brent remained in technically overbought territory for a 14th straight day, which would be the longest streak since 2012.
Fed policymakers still see the central bank’s benchmark overnight interest rate peaking this year in the 5.50%-5.75% range, just a quarter of a percentage point above the current range.
Interest rate hikes to tame inflation can slow economic growth and reduce oil demand.
“A combo of further interest rate hikes, dollar strength and additional oil price increases will be upping the possibility of a recession,” analysts at energy advisory Ritterbusch and Associates said in a note.
Energy markets, meanwhile, had little reaction to U.S. energy data showing crude inventories fell in line with expectations last week.
That crude stock draw was driven by strong oil exports, while gasoline and diesel inventories drew down as refiners began annual autumn maintenance, the U.S. Energy Information Administration (EIA) said in a weekly report. [EIA/S]
Crude inventories fell by 2.1 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 2.2 million-barrel drop.
U.S. gasoline futures slid to their lowest in two weeks, cutting the gasoline crack spread, a measure of refining profit margins, to its lowest since December 2022.
In Britain, data showed a surprise drop in inflation in August, as the consumer price index fell by 0.1 percentage point to 6.7%, its lowest since February 2022. Goldman Sachs said it expects the Bank of England to keep interest rates unchanged on Thursday as a result of the fall.
In Japan, exports fell in August for a second straight month, weighed by declines in China’s demand for steel and heavy oil and stoking fears of a downturn in the face of elevated global interest rates.
(Additional reporting by Robert Harvey in London, Yuka Obayashi in Tokyo, Emily Chow in Singapore and Nicole Jao in New York; Editing by Marguerita Choy, David Gregorio and Bill Berkrot)