Oil falls more than 1% ahead of US Federal Reserve rate decision
Shafaq News / Oil prices declined on Monday ahead of a U.S. Federal Reserve meeting as investors tried to gauge the central bank's appetite for further rate hikes, while concerns about China's fuel demand growth and rising Russian crude supply weighed on the market.
Brent crude futures fell 97 cents, or 1.3%, to $73.82 a barrel by 0437 GMT. U.S. West Texas Intermediate (WTI) crude was at $69.24 a barrel, also down 1.3%.
Both benchmarks notched their second straight weekly decline last week as disappointing China economic data raised concerns about demand growth in the world's largest crude importer, offsetting a boost in prices from Saudi Arabia pledging to cut production by 1 million barrels per day (bpd) in July.
"Oil prices are caught in a clash between two opposing forces, bearish asset allocators who point to monetary contraction and bullish oil speculators expecting lower inventories in 2H23," Bank of America Global Research's Francisco Blanch said in a note.
"The bearish allocators will maintain the upper hand for now, as oil prices struggle to rally until the Fed eases money supply," Blanch said. The bank still expects Brent crude to average about $80 a barrel in 2023.
The Fed's rate hikes have strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies and weighing on prices.
Most market participants expect the U.S. central bank to leave interest rates unchanged when it concludes its two-day monetary policy meeting on Wednesday.
"We maintain our call for a soft landing in the U.S., but policy could tighten further if growth does not slow, and funding pressures in the banking system keep risks skewed to the downside," Morgan Stanley economist Seth Carpenter said in a note.
(Reuters)
