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Global oil prices extended declines Wednesday, taking U.S. crude to the lowest levels since August of last year, as investors reacted to sharp pullbacks in stocks markets around the world following last night's surprisingly hawkish rate hike from the Federal Reserve.

The Fed's decision to lift its benchmark Fed Funds rate for the fourth time this year, while signalling two more hikes in 2019 and the continuing run-off of its $4 trillion balance sheet, has raised concern among global investors that tighter financing conditions in the world's largest economy will hamper growth prospects both at home at elsewhere.

Energy investors, in particular, are worried that a corresponding fall in oil demand will be compounded by record output from the world's largest producers, adding to a glut in global crude that will offset plans by OPEC to cut production by 1.2 million barrels a day next year.

Oil : Wednesday's recovery was short-covering. cc. JLC. #OOTT pic.twitter.com/4uCHOw8zrq

— Marc-André Fongern (@Fongern_FX) December 20, 2018

Brent crude contracts for February delivery, the global benchmark, were marked $1.33 lower from their Wednesday close in New York and changing hands at $55.91 per barrel in early European trading, marking a decline of nearly 37% from the October 3 peak of $86.74 per barrel.

WTI contracts for the same month, which are more tightly liked to U.S gas prices, were seen $1.35 lower at $46.82 per barrel, around 40% down from its early October peak.

Oil majors were also under pressure in European trading, with BP plc (BP - Get Report) falling 1.55% to extend the stock's three-month decline to 17%. Domestically-listed rival Royal Dutch Shell plc (RDS.A - Get Report) was marked 1.3% lower and down 16.2% since mid-October. France''s Total SA (TOT - Get Report) slipped 1.8% to €46.05 and has fallen more than 18.4% over the past three months. 

The U.S. Energy Information Administration said Wednesday that U.S. crude stocks fell by a much smaller-than-expected 497,000 barrels last week, while imports averaged around 7.4 million barrels per day and production hovered just under the recent record pace of 11.6 million barrels per day.

Earlier this week, EIA said production from the country's seven biggest shale areas, including the Permian Basin, is likely to top a record 8 million barrels per day this year before rising to around 8.1 million in early 2019. That's likely to add to overall U.S. output, which hit a record 11.7 million barrels per day in the week ending December 7.