Oil Prices Fall as Investors Anticipate Interest Rate Hikes
Introduction
Oil prices fell today, Monday, as investors anticipate further interest rate hikes by US and European central banks, while a lack of supply and hopes for stimulus from China kept Brent crude at $80 a barrel.
By 0045 GMT, Brent futures fell 41 cents, or 0.5%, to $80.66 a barrel. Futures for West Texas Intermediate crude fell 37 cents, or 0.5%, to $76.70 a barrel.
The two commodities rose 1.5% and 2.2%, respectively, last week, marking their fourth straight week of gains on expectations of supply cuts following the cuts in the OPEC+ group. Fighting also escalated last week in Ukraine after Russia pulled out of a deal to ship grain across the Black Sea.
Impact of Rate Hikes
Investors are factoring in rate hikes of a quarter of a percentage point at the US Central Bank and the European Central Bank this week, so the focus will be on statements from Federal Reserve Chairman (US Central Bank) Jerome Powell and European Central Bank President Christine Lagarde regarding increased interest going forward.
Market participants also expect China to take stimulus measures to support its fragile economy, which is likely to revive demand for oil from the world’s second largest oil consumer.
On the supply side, UAE Energy Minister Suhail Al Mazroui said on Friday that OPEC+’s moves to support the oil market are sufficient for the time being, adding that the group stands ready to take additional steps if necessary.
