Brent futures plunged by $1.69 to $81.01 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped $1.77 to $75.51.
Market analyst Tina Teng attributed this decline to the Federal Reserve's hawkish stance on monetary policy, which sparked fear of an economic recession and caused commodity prices to plummet. The U.S. dollar's strength weighed on oil as well, making it more expensive for those using other currencies.
Central banks in Europe and Britain raised their own interest rates on Thursday in order to fight inflation, while China—the world's second-largest economy—announced slower factory output and weaker retail sales for November, due to virus restrictions and increasing COVID-19 cases. Declines in global oil consumption, along with the resumption of operations in a section of the Keystone pipeline after a leak of 14,000 barrels in Kansas, also contributed to negative sentiment around crude oil prices.
Meanwhile, technical analysts noted that the market expects higher oil prices in the future, prompting energy firms to store oil in anticipation of a bounce. Brent futures and WTI were in contango for February and March, while the current front month is February for Brent and January for WTI. Data from the Energy Information Administration revealed that U.S. crude stockpiles rose by more than 10 million barrels last week, the highest in 2021.