Oil Prices Drop to Multi-Week Lows

On Thursday, the West Texas Intermediate for December delivery decreased US$3.95, or 4.6 percent, to settle at US$81.64 a barrel on the New York Mercantile Exchange. It marked the U.S. crude benchmark's lowest settlement for a front-month contract since Sept. 30.

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Brent crude for January delivery lost US$3.08, or 3.3 percent, to close at US$89.78 a barrel on the London ICE Futures Exchange, its lowest finish since Oct. 3. Traders grew concerned about more rate hikes from the Federal Reserve, which would slow the economy and subdue energy demand.

St. Louis Fed President James Bullard said that the central bank may have to raise its benchmark interest rate much higher than earlier anticipated to get inflation under control.

Minneapolis Fed President Neel Kashkari said it's unclear how high the U.S. central bank will need to raise interest rates as inflation still remains high.

Also weighing on oil was a stronger U.S. dollar. The dollar index, which measures the greenback against six major peers, increased to 106.6930 on Thursday, following hawkish comments from Fed officials. Historically, the price of oil is inversely related to the price of the U.S. currency.

Market participants cautiously assessed the prospects for global oil demand. The International Energy Agency raised its full-year oil demand growth estimate for 2022, but lowered its global oil demand growth estimate for 2023.

The Organization of the Petroleum Exporting Countries (OPEC) lowered its oil demand growth estimates for both 2022 and 2023 in its monthly oil market report published on Monday, citing economic challenges and geopolitical uncertainties.