Oil falls on expectations of interest rate hike

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September 7, 2022 07:58

Oil prices fell on Wednesday, after COVID-19 restrictions in China and expectations of further interest rate hikes renewed fears of a global economic recession and slashed fuel demand growth.

Brent crude futures fell $1.12, or 1.2 percent, to $91.71 a barrel by 0113 GMT, after falling 3 percent in the previous session.

US West Texas Intermediate crude futures fell $1.25, or 1.4 percent, to $85.63 a barrel.

Investors are also watching for further interest rate increases to curb inflation. The European Central Bank is widely expected to raise interest rates sharply when it meets on Thursday.

After the European Central Bank meeting, the Federal Reserve (the US central bank) is scheduled to meet on September 21st.
The rise of the US dollar, which increased by about 0.5%, also pressured oil prices. Oil is priced in US dollars, so a strong dollar makes crude more expensive for holders of other currencies.
However, expectations of a decline in oil inventories in the United States provided some support to prices.

A preliminary poll conducted by Archyde.com on Tuesday showed that US crude stocks are expected to decline for the fourth consecutive week, falling by an estimated 733,000 barrels in the week ending Sept. 2.

Weekly data on US inventories will be released from the American Petroleum Institute and the Energy Information Administration on Wednesday and Thursday, a day later than usual due to a public holiday on Monday.

Source: agencies