On Monday, oil prices fell as traders awaited additional rate hike signs from the U.S. and Europe, with tightened supply and prospects for Chinese stimulus supply and prospects for Chinese stimulus supporting Brent at $80 per barrel. By 0045 GMT, brent crude futures dipped 0.5% to $80.66 a barrel. West Texas Intermediate crude was down by …
On Monday, oil prices fell as traders awaited additional rate hike signs from the U.S. and Europe, with tightened supply and prospects for Chinese stimulus supply and prospects for Chinese stimulus supporting Brent at $80 per barrel.
By 0045 GMT, brent crude futures dipped 0.5% to $80.66 a barrel. West Texas Intermediate crude was down by 37 cents. The benchmarks for both increased 1.5% and 2.2% respectively for the fourth week in a row. This is due to supply was being forecast to tighten following OPEC+ cuts. Fighting also erupted in Ukraine last week after Russia pulled out of a U.N.-brokered secure maritime passage agreement for grain deliveries.
Analysts from National Australian Bank mentioned whilst another Fed rate hike this coming week may drive some short-term price volatility, we expect tightening market conditions on OPEC’s supply cutbacks and increased market speculation about further Chinese stimulus to keep prices higher through 3Q23.
As investors have priced in quarter-point rate hikes from the Fed and the European Central bank this week, Fed Chair Jerome Powell’s and ECB President Christine Lagarde’s opinion about future rate hikes will be key point. Rising interest rates have stifled investment and boosted the currency, making dollar-denominated commodities more expensive for holders of other currencies. Market participants also anticipate Beijing in implementing targeted stimulus steps to bolster its weakening economy, which will likely raise oil consumption in the world’s second largest consumer.
On supply, UAE Energy Minister stated on Friday that OPEC+’s initiatives to support the oil market are sufficient for the time being, and that the organization is always prepared if additional steps are required. Last week, US energy companies dropped the most oil rigs since early June. According to energy services firm Baker Hughes on Friday, operating units has been reduced.
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