NEW YORK: Oil prices slid about 2% on Thursday as traders worried about the fuel demand outlook due to a stronger dollar and further interest rate hikes by global central banks.

After rising for three straight days, Brent futures fell $1.69, or 2.0%, to $81.01 a barrel by 11:38 a.m. EST (1638 GMT). US West Texas Intermediate (WTI) crude fell $1.77, or 2.3%, to $75.51.

“The oil price is under pressure today as the Fed’s hawkish guidance for its monetary policy sparked renewed concerns about economic growth, lifting the US dollar and sending commodity prices down,” said CMC Markets analyst Tina Teng.

A stronger US dollar makes oil more expensive for those using other currencies.

On Wednesday, Federal Reserve Chair Jerome Powell said the US central bank will raise interest rates further next year, even as the economy slips toward a possible recession. On Thursday, the Bank of England and the European Central Bank raised interest rates to fight inflation.

In China, the world’s second biggest economy, lost more steam in November as factory output slowed and retail sales extended declines, the worst readings in six months, hobbled by surging COVID-19 cases and widespread virus curbs.

“Disappointing Chinese retail sales and manufacturing data (was) taking some steam out of recent bullish argument for China re-opening,” analysts at energy consulting firm Ritterbusch and Associates said.

Also pressuring oil prices, Canada’s TC Energy Corp said it was resuming operations in a section of its Keystone pipeline, a week after a leak of more than 14,000 barrels of oil in Kansas triggered a shutdown.

“Crude prices edged lower as a section of the Keystone pipeline restarted and as global recession risks increased after a wave of central banks delivered another strong round of tightening,” aid Edward Moya, senior market analyst at data and analytics firm OANDA.

Technical analysts said the market expects oil prices to be higher in the future, which could prompt energy firms to take the bearish step of moving more oil to storage so long as the higher future price covers the cost of storing that fuel.

Brent futures remained in contango for March and WTI was in contango for February and March. The current front-month is February for Brent and January for WTI.

US crude oil stockpiles rose by more than 10 million barrels last week, the most since March 2021, the Energy Information Administration said.