• The oil price has given up gains made after the surprise announcement of production cuts by OPEC .
• Surprisingly higher drawdown in weekly oil inventories failed to provide support to the oil price.
• A fresh leg of an interest rate hike by Western central banks would weigh further on the oil demand.

West Texas Intermediate (WTI), futures on NYMEX, have turned sideways in the early Asian session after printing a fresh three-week low of $74.60. The oil price has surrendered entire gains built after the surprise announcement of production cuts by the OPEC whose agenda was to provide stability in prices. A sheer sell-off in black gold has come amid rising fears of an economic slowdown in the United States and other developed economies.

Fears of an economic slowdown soared on Wednesday after the data from US Commerce Department showed that orders placed for business equipment with US factories fell sharply in March amid a dismal economic outlook and higher interest rates from the Federal Reserve (Fed). Upbeat Durable Goods Orders data was contaminated with rising orders for commercial aircraft. And, demand for motor vehicles saw a decline.

The oil price failed to capitalize on a sharp drawdown in oil inventories reported by US Energy Information Administration for the week ending April 21. The US agency reported a decline in oil stockpiles by 5.054 million barrels, higher than anticipated by market participants.

As various developed economies such as the US, the United Kingdom, and the Eurozone are facing the heat of high inflation, their respective central banks are expected to raise interest rates further to continue to weigh pressure on persistent inflation. The Federal Reserve (Fed) and the Bank of England (BoE) are highly expected to increase borrowing costs by 25 basis points (bps) while investors are divided over the pace of the interest rate hike to be adopted by the European Central Bank (ECB).