Crude oil prices continued to decline on Wednesday, failing to gain any purchase from a significant drop in U.S. crude inventories and instead driven by the fears of another interest rate hike and a climbing dollar.

At 5.22 p.m. EST on Wednesday, Brent crude was down 1.95% to $83.12 per barrel, for a $1.65 loss on the day, while WTI was 2.10% at $79.16 per barrel, for a $1.70 loss on the day.

Earlier in the day, the U.S. Energy Information Administration (EIA) reported an inventory draw of 4.6 million barrels for the week to April 14, compared to a modest build in crude oil inventories for the previous week, at 600,000 barrels. For the week before that, however, the EIA had estimated a sizable draw of 3.7 million barrels.

Instead of responding to the downsized inventory, oil markets are responding to a strengthening U.S. dollar, which in turn is rising out of fear the Federal Reserve may hike interest rates further, which would have a negative effect on oil demand.
Also weighing negatively on oil prices this week have been soaring inflation in Europe and economic data coming out of China that makes demand uncertain.

As noted by Reuters, at the time of writing, WTI and Brent could experience their lowest closing price since March 31 after gaining significantly on the back of the surprise OPEC+ production cut announcement in the first days of the month.
A Fed rate still looms large, with markets expecting one more rate hike in May before the Fed presses pause.

JP Morgan analysts are expecting oil prices to rally once the Fed pauses rate hikes, predicting $94 per barrel in the fourth quarter of this year.