Oil faltered ahead of inflation-dampening central bank rate hikes that are likely to dampen demand.
est Texas Intermediate was trading near $84 a barrel after closing nearly 2 percent lower near an eight-month low on Tuesday. The Federal Reserve is expected to hike interest rates by 75 basis points on Wednesday, quantifying the “pain” it has warned of when it releases new economic forecasts.
Crude oil is on track for its first quarterly loss in more than two years as concerns about a global economic slowdown weigh on the energy demand outlook. The Fed’s decision will be followed by other central banks from Europe to Asia, which are also expected to increase borrowing costs.
“If the Fed delivers another hawkish surprise this week, it could spell further downside for oil prices,” said Charu Chanana, market strategist at Saxo Capital Markets Pte. in Singapore. “In the medium term, strong oil demand is expected to remain as a harsh winter in Europe could lead to a greater shift from gas to oil, while tensions between Russia and Ukraine are also rising.”
Despite the weak near-term outlook, Saudi Aramco said idle production capacity in the oil market could be wiped out once economies recover, citing a lack of investment in fossil fuels as a key reason for the energy crisis. Crescent Petroleum Co. Chief Executive Officer Majid Jafar echoed the sentiment, saying prices will remain high due to “chronic underinvestment” in the sector.
The industry-funded American Petroleum Institute reported that inventories of US crude rose by more than 1 million barrels last week, according to people familiar with the numbers. Inventory levels at the main storage center in Cushing, Oklahoma, as well as nationwide gasoline supplies were expanded.
Russia’s sea crude exports fell sharply in the first half of September after being hit first by a storm in the Pacific and then by a drop in supplies from the Baltic Sea. Increased inflows to the big Asian buyers – China and India – are not offsetting a volume decline in Europe.
https://www.independent.ie/business/world/oil-fluctuates-ahead-of-central-bank-moves-on-interest-rates-42005895.html Oil falters ahead of central bank interest rate moves