NEW YORK: Oil prices fell 4% on Wednesday, extending steep losses from the previous session, as investors fretted about the health of the US economy ahead of an expected Federal Reserve interest rate hike later in the day.

Brent futures fell $2.85, or 3.8%, to $72.47 a barrel by 12:29 p.m. EDT (1629 GMT). The global benchmark hit a session low of $71.70 a barrel, its lowest since March 20.

US West Texas Intermediate crude (WTI) fell $2.92, or 4.1%, to $68.74. WTI dropped to a session low of $67.95 a barrel, lowest since March 24.

Both benchmarks fell 5% during the previous session, when they notched their biggest daily percentage declines since early January.

“The Federal Reserve is expected to deliver another quarter-point increase later today as part of its long-running battle against inflation,” PVM Oil analyst Stephen Brennock said.

He added that concerns about the health of the US banking sector and downbeat US jobs data “did nothing to dispel fears that the US economy is barrelling towards a shallow recession.” The Fed is expected to hike interest rates 25 basis points, and the European Central Bank is also expected to raise rates at its policy meeting on Thursday. Rate hikes could slow economic growth and hit energy demand.

Oil prices extended losses after government data showed US gasoline inventories unexpectedly rose by 1.7 million barrels last week. Analysts polled by Reuters had expected a 1.2 million-barrel drop.

US crude inventories fell by 1.3 million barrels in the week, compared with forecasts for a 1.1 million-barrel drop.