Oil prices fell due to concerns about U.S. rate hikes and weaker growth in China

Fears of China’s slowing development and potential future increases in U.S. interest rates lowering fuel consumption in the two largest economies in the world caused oil prices to decline in early trade on Thursday, extending losses to a fourth straight session. While U.S. West Texas Intermediate crude (WTI) was down 39 cents, or 0.49%, to $78.99 a barrel, Brent crude futures dropped 37 cents, or 0.44%, to $83.08 a barrel.

Concerns that China’s worsening real estate sector issue is choking what little economic momentum there is have increased in light of a large Chinese trust firm’s missed payments on investment products and a decline in home prices. This week, China’s central bank unexpectedly reduced key policy rates for the second time in three months, but many fear this may not be enough to stop the economy’s downward trend.

In a note, ANZ Research noted that “a risk-off tone across markets weighed on sentiment across commodities, compounded by further economic weakness in China.”The U.S. Federal Reserve’s July meeting minutes, which were made public on Wednesday, revealed that the majority of its policymakers still gave the fight against inflation top priority.

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