Prices are also probably being weighed down by potential interest-rate hikes by the US Federal Reserve
30 January 2023 - 12:22
byAlex Lawler
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London — Oil fell on Monday, giving up earlier gains, as looming interest rate hikes by major central banks and signs of strong Russian exports offset rising Middle East tension over a drone attack in Iran and hopes of higher Chinese demand.
Investors expect the Federal Reserve to raise rates by 25 basis points on Wednesday, followed the day after by half-point hikes from the Bank of England and European Central Bank, and any deviation from that script would be a shock.
Brent crude fell 29c, or 0.3%, to $86.37 a barrel by 9.10am GMT while US West Texas Intermediate crude dropped 52c, or 0.7%, to $79.16.
Oil prices “are likely being weighed down by potential interest rate hikes in the upcoming Fed meeting”, Serena Huang, head of APAC analysis at Vortexa, said in an email.
The market also came under pressure from indications of strong Russian supply, despite an EU ban and G7 price cap imposed over its invasion of Ukraine. Both oil benchmarks last week saw their first weekly loss in three.
Besides the central bank meetings, a gathering on Wednesday of key ministers from Opec+, will also be in focus.
The Opec+ panel meeting on Wednesday is unlikely to tweak oil output policy — although broker PVM said it could surprise with a small cut.
“The upcoming flurry of price catalysts sets the stage for significant swings in oil prices this week,” said Stephen Brennock of PVM. “That said, prices are unlikely to fall below $80 and will struggle to get close to $100.”
Oil rose earlier on Monday amid tension in the Middle East following a drone attack in oil producer Iran. While it is not clear yet what's happening in Iran, any escalation there has the potential to disrupt crude flow, said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.
Hopes of a rise in Chinese demand have boosted oil in 2023. The world's biggest crude importer pledged over the weekend to promote a consumption recovery which would support demand.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil slips in part due to Middle East tension
Prices are also probably being weighed down by potential interest-rate hikes by the US Federal Reserve
London — Oil fell on Monday, giving up earlier gains, as looming interest rate hikes by major central banks and signs of strong Russian exports offset rising Middle East tension over a drone attack in Iran and hopes of higher Chinese demand.
Investors expect the Federal Reserve to raise rates by 25 basis points on Wednesday, followed the day after by half-point hikes from the Bank of England and European Central Bank, and any deviation from that script would be a shock.
Brent crude fell 29c, or 0.3%, to $86.37 a barrel by 9.10am GMT while US West Texas Intermediate crude dropped 52c, or 0.7%, to $79.16.
Oil prices “are likely being weighed down by potential interest rate hikes in the upcoming Fed meeting”, Serena Huang, head of APAC analysis at Vortexa, said in an email.
The market also came under pressure from indications of strong Russian supply, despite an EU ban and G7 price cap imposed over its invasion of Ukraine. Both oil benchmarks last week saw their first weekly loss in three.
Besides the central bank meetings, a gathering on Wednesday of key ministers from Opec+, will also be in focus.
The Opec+ panel meeting on Wednesday is unlikely to tweak oil output policy — although broker PVM said it could surprise with a small cut.
“The upcoming flurry of price catalysts sets the stage for significant swings in oil prices this week,” said Stephen Brennock of PVM. “That said, prices are unlikely to fall below $80 and will struggle to get close to $100.”
Oil rose earlier on Monday amid tension in the Middle East following a drone attack in oil producer Iran. While it is not clear yet what's happening in Iran, any escalation there has the potential to disrupt crude flow, said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.
Hopes of a rise in Chinese demand have boosted oil in 2023. The world's biggest crude importer pledged over the weekend to promote a consumption recovery which would support demand.
Reuters
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