Oil prices fell more than four per cent on Thursday, hitting their lowest in more than a year on worries about oversupply and the outlook for energy demand as a U.S. interest rate rise knocked stock markets.

Equities dropped worldwide after the U.S. Federal Reserve raised rates and maintained most of its guidance for additional hikes over the next two years, dashing investor hopes for a more dovish policy outlook.

U.S. light crude oil CLc1 fell by $2.35 a barrel, or 4.9 per cent, to a low of $45.82, before recovering some ground to around $46.45 by 1430 GMT.

Brent LCOc1 dropped by $2.60, or 4.5 percent, to $54.64 a barrel, its lowest since September 2017, and last traded around $55.54, down $1.70.

Both major oil futures contracts rallied sharply on Wednesday but are now at or close to their lowest levels for over 15 months, more than 30 per cent below multi-year highs reached at the beginning of October.

“Oil prices are selling-off once again as market players take their cues from a rout on global stock markets,” said Stephen Brennock, analyst at London brokerage PVM Oil.

The Organisation of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices.

But the cuts will not happen until next month, and production has been at or near record highs in the U.S., Russia and Saudi Arabia.

Saudi Energy Minister Khalid al-Falih said he expected global oil stocks to fall by the end of the first quarter, but added that the market remained vulnerable to political and economic factors as well as speculation.

OPEC plans to release a table detailing voluntary output cut quotas for its members and allies such as Russia in an effort to shore up prices, OPEC Secretary-General Mohammad Barkindo said in a letter seen by Reuters on Thursday.

U.S. crude inventories fell by 497,000 barrels in the week to Dec. 14, the U.S. Energy Information Administration said, smaller than the decrease of 2.4 million barrels analysts had expected.

Distillate stockpiles which include diesel and heating oil, dropped by 4.2 million barrels, the EIA said, versus expectations of a 573,000-barrel increase.

Distillate demand rose to the highest since January 2003, which bolstered buying, particularly in heating oil futures, the market’s proxy for diesel.