Oil prices fall ahead of potential large US rate hike, possible inflation


By Julia Payne


LONDON (Reuters) -Oil prices fell on Thursday as investors weighed tight supplies against the prospect of a large U.S. rate hike that could stem and curb crude demand.


Brent crude futures for September were down 18 cents to $99.39 a barrel at 0727 GMT after settling below $100 for the second straight session on Wednesday.


U.S. West Texas Intermediate crude for August delivery was at $95.84 a barrel, down 43 cents.


Oil prices have tumbled in the past two weeks on recession concerns despite a drop in crude and refined products exports from Russia amid Western sanctions and supply disruption in Libya.


“It is all sentiment driven at the moment and that has caused most of the losses seen in oil over the last few weeks,” said Howie Lee, an economist at Singapore’s OCBC bank.


“I don’t see any significant changes in oil supply fundamentals and that is probably why we still see Brent holding around the $100 level.”


The U.S. Federal Reserve is seen ramping up its battle with 40-year high with a supersized 100 basis points rate hike this month after a grim report showed price pressures accelerating.


The Fed rate hike is expected to follow a similar surprise move by the Bank of Canada on Wednesday.


Investors also flocked to the dollar, often seen as a safe haven asset. The dollar index hit a 20-year high on Wednesday, which makes oil purchases more expensive for non-U.S. buyers. [USD/]


Worries of COVID-19 curbs in multiple Chinese cities to rein in new cases of a highly infectious subvariant have also kept a lid on oil prices.


China’s daily crude oil imports in June sank to their lowest since July 2018, as refiners anticipated lockdown measures to curb demand, customs data showed on Wednesday.


Data from the U.S. Information Administration also point to slackening demand, with product supplied slumping to 18.7 million barrels per day, the lowest since June 2021. Crude inventories rose, bolstered by another big release from strategic reserves.


U.S. President Joe Biden will on Friday fly to Saudi Arabia, where he will attend a summit of Gulf allies and call for them to pump more oil.


However, spare capacity at the Organization of the Petroleum Exporting Countries is running low, with most of the producers pumping at maximum capacity, and it is unclear how much extra Saudi Arabia can bring into the market quickly.


(Reporting by Julia Payne in London Additional reporting by Florence Tan in SingaporeEditing by Himani Sarkar and Mark Potter)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor



Source link

Recent Posts

Scan to Download
ios&Android APP

Open trading account and start trading!

Join our happy customers