NEW YORK – Oil prices slid about 1per cent to a near two-week low on Wednesday as the U.S. dollar soared, the country’s gasoline demand declined and investors worried about a possible global recession.

Oil dips as U.S. dollar soars; gasoline demand declines- oil and gas 360

Source: Reuters

Trading was volatile, with prices jumping more than US$2 a barrel earlier in the session, on worries about a further Russian military mobilization and signs of a demand recovery in China.

Brent futures fell 57 cents, or 0.6per cent, to US$90.05 a barrel by 11:41 a.m. EDT (1541 GMT), on track for its lowest close since Sept. 8. U.S. West Texas Intermediate (WTI) crude fell 66 cents, or 0.8per cent, to US$83.28, headed for its lowest close since Sept. 7.

U.S. gasoline demand over the past four weeks fell to 8.5 million barrels per day (bpd), its lowest since February, according to the U.S. Energy Information Administration (EIA). [EIA/S]

“The stand-out data point is the continuing weakness in gasoline demand. It’s really what’s been haunting this market,” said John Kilduff, partner at Again Capital LLC in New York.

The U.S. Energy Information Administration reported a 1.1 million barrel increase in crude stocks last week, smaller than the 2.2 million barrel build analysts forecast in a Reuters poll. On Tuesday, the American Petroleum Institute (API) industry group reported a roughly 1.0 million barrel increase in the week to Sept. 16. [API/S]

Analysts at energy consulting firm Ritterbusch and Associates said oil prices rose early in the session “largely off Putin’s apparent escalation of the Ukraine war,” but were being held down by a “strong dollar and expected higher U.S. interest rates.”

Russian President Vladimir Putin called up 300,000 reservists to fight in Ukraine and backed a plan to annex parts of the country, hinting he was prepared to use nuclear weapons.

Oil prices soared to a multi-year high in March after the Ukraine war broke out. European Union sanctions banning seaborne imports of Russian crude will come into force on Dec. 5.

Investors have been bracing for the U.S. Federal Reserve to announce its third straight interest rate hike of 75 basis points on Wednesday afternoon, fearing this could further sink fuel demand.

The dollar was on track for its highest close in over 20 years against a basket of other currencies, making oil more expensive for buyers using other currencies.

Signs of a recovery in Chinese demand gave prices a lift early in the session.

In Europe, “government are increasingly intervening in energy markets in an attempt to stave off economic crisis,” analysts at energy consulting firm EBW Analytics said in a note.

Germany agreed to nationalize natural gas company Uniper SE, while the British government said it would cap wholesale electricity and gas costs for businesses.

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