Oil prices could fall 5% in a week on Fed rate concerns

(Updated quotes, title. Details added)

March 10 (Reuters) – Crude oil fell for a fourth consecutive session on Friday, which could end a five-day session with its deepest drop in five weeks amid fears that a sharp US interest rate hike could slow growth and impact fuel demand.

Brent crude oil futures fell 0.58% to $81.12 a barrel at 3:59 p.m. Moscow time, WTI fell 0.78% to $75.13 a barrel.

Expectations of another round of monetary policy tightening in the US and Europe clouded the outlook for global growth and sent both indices down more than 5.5% this week, making them their biggest falls since early February.

Fed Chairman Jerome Powell signaled again on Wednesday that an interest rate hike was imminent, and likely at a faster pace.

Global stocks, which often move in tandem with oil prices, hit a two-month low on Friday as investors shed bank shares amid fears of a repeat of the crash of U.S. lender Silicon Valley Bank

The job market still looks tight, despite earlier data showing that last week the number of Americans applying for unemployment benefits rose the most in five months.

“Investors are becoming more cautious,” the Haitong Futures memo said.

The prospect that Friday’s release of US labor statistics will lead to faster interest rate hikes has already sent financial markets plummeting, with analysts expecting oil prices to come under pressure as well.

“All eyes are on today’s US data, which is a key benchmark ahead of the Fed’s announcement of an interest rate hike,” Haitong analysts wrote in a note.

Investors are also closely watching the decline in exports from Russia after Moscow decided in March to cut oil production by 500,000 tons. barrels per day.

Earlier this week, Reuters reported that Russia plans to reduce the daily export and transit of Urals, KEBCO and Siberian Light oil from ports in the west of the country by 10% in March compared to the February schedule.

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(Sudarshan Varadhan and Muyu Xu in Singapore)


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