A day after falling 7% on demand concerns, oil prices are below $100 per barrel

Early on Wednesday in Asian trading, oil prices dropped under $100 per barrel due to US inventory data showing increases in both crude and refined products and growing concerns about a worldwide economic downturn.

The price of Brent crude futures decreased by 68 cents, or 0.7%, to $98.81 a barrel. At $95.12, also the lowest in three months, US West Texas Intermediate crude fell 72 cents, or 0.8%.

Due to concerns that aggressive interest rate increases to combat inflation may trigger an economic slump that will negatively affect oil demand, investors have dumped their oil investments.

During the previous session, prices dropped by more than 7% amidst erratic trading.

The market was also affected by China’s renewed COVID-19 travel restrictions. In an effort to stop the spread of a highly contagious subvariant of the virus, several cities in the second-largest economy of the world have implemented new restrictions, ranging from commercial closures to general lockdowns.

For the week ending July 8, US crude stockpiles increased by around 4.8 million barrels. According to market sources citing American Petroleum Institute data on Tuesday, gasoline stockpiles increased by 3 million barrels and distillate stocks increased by roughly 3.3 million barrels.

On Tuesday, the dollar index—which measures the value of the dollar against a basket of six rival currencies—rose to 108.56, its highest level since October 2002, earlier in the day.

Since oil is typically priced in US dollars, a stronger dollar increases the cost of the commodity for owners of other currencies. During times of market turbulence, investors also frequently consider the dollar as a safe haven.