Oil prices steady as prospect of Fed hikes could dampen fuel demand

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Storage tanks are seen at Marathon Petroleum’s Los Angeles refinery, which processes domestic and imported crude oil into California Air Resources Board (CARB) gasoline, CARB diesel fuel and other petroleum products, in Carson, California, United States, March 11, 2022. Photo taken with a drone. REUTERS/Bing Guan/File Photo

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SINGAPORE, Sept 20 (Reuters) – Oil prices were little changed on Tuesday, after rising in the previous session on concerns that interest rate hikes in the United States to tame inflation could dampen economic growth and fuel demand from the world‘s largest crude consumer.

Brent crude futures for November settlement fell 7 cents, or 0.1%, to $91.93 a barrel at 0136 GMT.

U.S. West Texas Intermediate crude for October delivery was at $85.59 a barrel, down 14 cents, or 0.2%. The October contract will expire on Tuesday and the more active November contract was at $85.20, down 16 cents, or 0.2%.

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The dollar rose against major currencies on Monday ahead of a series of central bank meetings this week led by the US Federal Reserve, which is expected to raise interest rates another 75 basis points to fight inflation. Read more

A stronger greenback makes commodities denominated in dollars more expensive for holders of other currencies.

“Crude prices were under pressure as fears of aggressive central bank tightening raise concerns of a rapidly weakening global economy,” Edward Moya, senior market analyst at OANDA, said in a note. .

“The global economy is slowing and that has been troubling for the outlook for crude demand.”

U.S. crude oil inventories are estimated to have risen last week by around 2 million barrels in the week to September 16, a preliminary Reuters poll showed on Monday. Read more

The US Department of Energy will sell up to 10 million barrels of oil from the Strategic Petroleum Reserve for delivery in November, extending the timeline of a plan to sell 180 million barrels of the stockpile to rein in fuel prices . Read more

The deadlock over a relaunch of the Iran nuclear deal continues to prevent exports from that country from fully returning to the market, providing some support for prices.

Russia said on Monday that unresolved issues remained in the negotiations while France‘s foreign minister said it was up to Tehran to make a decision as the window for finding a solution was closing. Read more

Still, signs that major producers are unable to meet their production quotas did not send prices much higher on Monday.

An internal document from the Organization of the Petroleum Exporting Countries and its Russian-led allies, known as OPEC+, showed the group fell short of its oil production target of 3.583 million barrels per day (bpd) in August. In July, OPEC+ missed its target of 2.892 million bpd. Read more

Analysts at ANZ Research on Monday pointed to the lifting of citywide lockdowns in China’s Chengdu and Dalian as a potential spark for a stronger recovery in oil demand growth in the world’s second-largest oil consumer. .

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Reporting by Isabel Kua; edited by Christian Schmollinger

Our standards: The Thomson Reuters Trust Principles.

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