Crude oil prices fell sharply on Wednesday, weighed down by news that the Group of Seven nations has considered a price cap on Russian oil, and data showing a bigger than expected jump in U.S. gasoline stockpiles last week.
West Texas Intermediate Crude oil futures for December ended down $3.01 or about 3.7% at $77.94 a barrel.
Brent crude futures were down $3.15 or 3.56% at $85.21 a barrel a little while ago.
Data released by U.S. Energy Information Administration (EIA) showed crude inventories dropped by 3.7 million barrels in the week ended November 18th, higher than an expected drop of about 1.1 million barrels.
Gasoline inventories increased by 3.1 million barrels last week, as against forecasts for an increase of just 383,000 barrels, while distillate stockpiles saw an increase of 1.7 million barrels in the week.
According to reports, G7 nations are considering a price cap of $65-70 a barrel on Russian seaborne oil.
Oil prices were also weighed down by the recent report from the Organization for Economic Co-operation and Development (OECD) that the global economy faces significant challenges as severe energy crisis pushed up inflation and lowered economic growth all around the globe.
The Paris-based OECD forecast global growth to ease to 2.2% next year from 3.1% in 2022. In 2024, growth is projected to be 2.7%, helped by initial steps to ease policy interest rates.
Meanwhile, the minutes from the Federal Reserve’s most recent policy meeting reveal senior Fed officials expect smaller increases in interest rates will “soon be appropriate” amid rising recession fears.
The minutes say that some senior officials are unsure about how much further rates will rise and that they are of the view that slower rate hikes would give them more time to evaluate the lagging effects on the economy amid the rising threat of a recession.