Oil prices ease on concerns over rate hikes, China gloom

Brent crude oil price news: Oil prices eased in early trade on Wednesday, weighed down by fears U.S. interest rates could stay higher for longer and economic growth could slow further in top crude importer China and hurt fuel demand. Brent crude dipped 17 cents, or 0.2 per cent, to $83.86 a barrel by 0031 GMT while U.S. West Texas Intermediate crude was at $79.56 a barrel, down 8 cents, or 0.1 per cent. Both benchmarks lost about 0.5 per cent on Tuesday.

Markets are awaiting hints on the outlook for interest rates from policy makers when Federal Reserve officials and policy makers from the European Central Bank, the Bank of England and the Bank of Japan head to Jackson Hole, Wyoming, for their annual central bank conference later this week. "Investors are reluctant to take big positions ahead of the Jackson Hole Symposium later this week as they want to find clues for the next step by the U.S. Federal Reserve," said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

"Concerns over higher interest rates and sluggish demand in China are expected to outweigh tightening supply from OPEC+ in the short term," he said. China, the world's second-largest economy, is considered crucial to shoring up oil demand over the rest of the year. Its weak growth has frustrated markets as pledged stimulus has fallen short of expectations, including a smaller-than-expected cut in a key lending benchmark on Monday.

On the supply side, Saudi Arabia has volunteered to cut output by another 1 million barrels per day (bpd) from July through September, and Russia plans to reduce exports in August by 500,000 bpd, part of a deal among members of the Organization of the Petroleum Exporting Countries and its allies, a grouping know as OPEC+, to curb supplies and support prices. Meanwhile, crude stocks continued to fall in the U.S., dropping by about 2.4 million barrels in the week ended Aug. 18, according to market sources citing American Petroleum Institute figures on Tuesday.

That was a slightly smaller draw than the 2.9 million barrels drop analysts expected in a Reuters poll. The weekly report from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due at 1430 GMT on Wednesday.