Oil prices slip ahead of expected US Fed interest rate hike

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Oil prices fell on Wednesday on fuel demand concerns ahead of a Federal Reserve meeting at which the central bank is expected to hike interest rates by at least 75 basis points to fight inflation.

WTI crude futures were down 8 cents, or 0.1 percent, to $118.85 a barrel by 0008 GMT. Brent crude futures fell 26 cents, or 0.2 percent, to $120.91 a barrel.

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Rising inflation has investors and oil traders bracing for a big move by the Fed this week — what could be the biggest US interest rate hike in 28 years.

On the demand side, China’s recent COVID outbreak, which has been traced to a 24-hour bar in Beijing, has raised fears of a new phase of the lockdown.

In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) stuck to its forecast that global oil demand in 2022 would exceed pre-pandemic levels, but said Russia’s invasion of Ukraine — Moscow calls its actions a “special operation” — and Developments related to the coronavirus pandemic pose a significant risk.

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The producer group expects demand growth to slow next year, OPEC delegates and industry sources told Reuters, as rising oil prices help push inflation and weigh on the global economy.

However, some support for prices is tight supply, exacerbated by a fall in exports from Libya amid a political crisis that has hit manufacturing and ports.

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