(Reuters)

Global oil prices extended losses on Wednesday (May 3), after slumping about five per cent to a five-week low in the previous session, as investors braced for more rate hikes this week that could dent energy demand.

Brent futures fell 13 cents, or 0.2 per cent, to US$75.19 a barrel by 0015 GMT, while West Texas Intermediate crude (WTI) also fell 13 cents, or 0.2 per cent, to US$71.53.

Both benchmarks closed at their lowest since March 24 in the previous session, when they also recorded their biggest one-day percentage declines since early January.

The US Federal Reserve is expected to hike interest rates by an additional 25 basis points on Wednesday to combat inflation, while the European Central Bank (ECB) is also expected to raise rates at its regular policy meeting on May 4.

More hikes could slow economic growth and hit energy demand.

Concerns about diesel demand in recent months, meanwhile, have pushed down US heating oil futures to their lowest level since December 2021.

Energy prices are also under pressure after data from China over the weekend showed manufacturing activity fell unexpectedly in April. China is the world’s largest energy consumer and top buyer of crude oil.

The reopening of China’s economy will be pivotal for Asia, the International Monetary Fund said as it raised its economic forecast for the region on Tuesday. But it warned of risks from persistent inflation and global market volatility driven by Western banking-sector woes.

Meanwhile, US crude stockpiles fell for a third week in a row for the first time since December, down some 3.9 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday.