Oil dives 4% as demand concerns persist

Oil drilling rigs

Oil prices plummeted today, May 3, extending steep losses from the previous session after the US Federal Reserve decided to raise interest rates and concerns remained over economic activity.

International benchmark Brent crude slumped nearly 4%, or $2.99, to close at $72.33 a barrel.

West Texas Intermediate (WTI) crude dropped 4.3%, or $3.06, to record $68.60 per barrel – the lowest level since March 20. After the monetary policy meeting, the Federal Reserve decided to raise interest rates to a range of 5% and 5.25%, which is the highest level since August 2007. The central bank, however, left the door open to a possible halt in their increases in the coming period.

US banking crisis has kept oil prices under pressure over the past three sessions, amid fears of a slowdown in economic activity.

The International Monetary Fund lowered its forecast for Asian growth next year to 4.4%, and warned of risks, such as higher-than-expected inflation, slowing global demand as well as the impact of the pressures from the US and European banking sectors.

Meanwhile, US Energy Information Administration data revealed that oil inventories fell by 1.3 million barrels, marking the third consecutive weekly decline for the first time since December, against expectations of a drop of 1.1 million barrels.

Earlier, Bloomberg reported that Russian oil exports did not show any signs of declining, despite Moscow's pledge to reduce its oil production by 500,000 barrels per day.