Oil plunges 3% after BoE interest rate hike

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NEW YORK: Oil futures fell over 3% on Thursday, after trader concerns over the impact of a bigger-than-expected Bank of England (BoE) rate hike outweighed a surprise draw in US oil supplies.

Brent futures were down $2.65, or 3.4%, to $74.47 a barrel at 1522 GMT and US West Texas Intermediate (WTI) crude futures were down $2.69, or 3.7%, at $69.84.

The benchmarks erased gains from the previous session, during which US corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls could lower biofuels blending and increase oil demand.

The BoE raised interest rates by a bigger-than-expected half a percentage point to fight stubbornly high inflation. The increase was the central bank’s 13th straight hike.

Higher interest rates could slow economic growth and reduce oil demand.

On Thursday the market was cautious after Fed Chair Jerome Powell said two more US interest rate hikes of 25 basis points each by the end of the year was “a pretty good guess.”

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