Oil prices fall after Fed decision to raise rate by 25 basis points

Oil fell as investors weighed the Federal Reserve’s policy outlook after another hike and digested a mixed snapshot of U.S. supply and demand.

West Texas Intermediate futures traded mostly between $70 and $71 a barrel on Thursday. Brent and WTI, while below Wednesday’s close, were near the same levels they were at before Fed Chairman Jerome Powell reported that there could be more tightening after this week’s 25 basis point hike, and said officials don’t expect to cut rates this year. His comments came less than two weeks after the most severe banking crisis since 2008.

Crude is heading for the steepest first-quarter drop since 2020, when the pandemic hit demand. The drop has been driven by concerns about a possible U.S. recession, robust Russian oil flows despite sanctions and banking turmoil. Still, there are signs of strong demand in Asia as China recovers after abandoning its Covid Zero policy late last year.

Meanwhile, U.S. crude stockpiles expanded to the highest level since May 2021, as strong builds on the Gulf Coast outweighed a decline at the key storage hub of Cushing, Oklahoma, Energy Information Administration data showed. Still, combined oil and fuel exports jumped to a record 12.3 million barrels per day, and gasoline holdings fell again.