Oil prices fell sharply this week as soft economic readings and fears of rising interest rates pushed up uncertainty over a recovery in demand this year.

Crude prices are set to close the week down over 6%, snapping four straight positive weeks. Recent losses also saw oil prices largely reverse strong gains made in recent weeks on the back of an unexpected supply cut by the Organisation of Petroleum Exporting Countries earlier in April.

Signs of overheated inflation in Europe and the UK increased expectations that the Bank of England and the European Central Bank will continue to hike interest rates, while a slew of Federal Reserve officials called for more rate hikes to curb relatively high inflation.

In the U.K. inflation unexpectedly remained in double-digits in March as households continued to grapple with soaring food and energy bills. The consumer price index rose by an annual 10.1%, according to the Office for National Statistics, above a consensus projection of 9.8% in a Reuters poll of economists. This is a slight dip from the unexpected jump to 10.4% of February, which broke three consecutive months of declines since October’s 41-year high of 11.1%.

The Bank of England last month hiked interest rates by 25 basis points to 4.25%, and traders are pricing a 72% probability of a further quarter-point hike at the Monetary Policy Committee’s meeting on May 11.

“While core inflation is likely to prove more stubborn, the squeeze on consumer demand from rising taxes and the lagged impact of raising interest rates should put it on course for a firm downward path by the Autumn,” said Suren Thiru, economics director at ICAEW (Institute of Chartered Accountants in England and Wales).

The U.K. economy was flat in February, as widespread industrial action and the persistent cost of living crisis hindered activity, and Thiru suggested that the MPC may be more divided over whether to hike interest rates further in May, as “concerns grow over a flatlining economy.”

Hugh Gimber, global market strategist at JPMorgan Asset Management, said that, although headline inflation is again heading in the right direction, the central bank is “still a long way from being able to feel comfortable that price pressures are under control.”

Overall this week’s economic news cycle as pushed up concerns that higher interest rates will stymie economic growth this year, largely hampering crude demand despite a recovery in Chinese consumption pushing oil prices much lower.

As we move into the final week of April fuel card users can expect a fall in the region of 1.2 pence per litre.

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