Oil prices fall slightly on prospect of higher US interest rates

A view shows the Kozmino crude oil terminal on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

Join now for FREE unlimited access to Reuters.com

SINGAPORE, Sept 14 (Reuters) – Oil prices edged lower on Wednesday on fears of another U.S. Federal Reserve interest rate hike next week following an unexpected rise in consumer prices in August, outweighing support from OPEC’s strong oil demand growth forecast.

Brent crude futures fell 38 cents, or 0.4%, to $92.79 a barrel at 0407 GMT. U.S. West Texas Intermediate crude was at $87.02 a barrel, down 29 cents, or 0.3%.

Pressure on prices was a hotter-than-expected US inflation report on Tuesday that dashed hopes that the Fed could ease its rate-tightening policy in the months ahead. Fed officials are due to meet next Tuesday and Wednesday as inflation remains well above the US central bank’s 2% target. Read more

Join now for FREE unlimited access to Reuters.com

“A strong US dollar and the expectation of another large rate hike by the Fed weighed on sentiment,” said CMC Markets analyst Tina Teng.

The dollar climbed near a 24-year high against the yen on Wednesday. Oil is usually priced in US dollars, so a stronger greenback makes the commodity more expensive for holders of other currencies. Read more

In China, ongoing tough COVID-19 restrictions are squeezing fuel demand from the world’s largest oil importer. Read more

“China’s zero COVID policy remains intact and this will limit any rebound that emerges over the coming weeks,” Edward Moya, senior market analyst at OANDA, said in a note.

“The U.S. is the big wild card and if that demand outlook weakens, oil could resume its downward trajectory in place since the start of the summer.”

On the supply side, U.S. crude inventories rose about 6 million barrels for the week ended September 9, according to market sources citing figures from the American Petroleum Institute on Wednesday.

The U.S. government will release inventory data at 10:30 a.m. EDT (2:30 p.m. GMT) on Wednesday.

Providing some support for oil prices, the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday reiterated its forecast for global oil demand growth in 2022 and 2023, citing signs that major economies are doing better than expected despite headwinds such as soaring inflation.

Oil demand will increase by 3.1 million barrels per day (bpd) in 2022 and 2.7 million bpd in 2023, OPEC said in a monthly report, leaving its forecast unchanged from last month. Read more

Join now for FREE unlimited access to Reuters.com

Reporting by Isabel Kua; Editing by Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

Comments are closed.