Oil steadies after falling on threat of more rate hikes

New York — Oil prices steadied in early Asian trade on Tuesday after falling more than 2% in the previous session on the threat of further interest rate hikes and continued Russian crude flows.

Brent crude futures gained 28c to $85.18 a barrel by 1.55am GMT, while US West Texas Intermediate (WTI) crude futures were up 9c to $77.99.

Investors expect the US Federal Reserve will hike interest rates by 25 basis points on Wednesday, with a half-point increase by the Bank of England and European Central Bank the next day. Higher rates could slow the global economy and weaken oil demand.

The market also turned its attention to a planned virtual meeting on February 1 at 11am GMT of Opec ministers who are expected to recommend keeping the oil producer group’s current output policy unchanged. Opec agreed in October to cut its production target by 2-million barrels a day, about 2% of world demand, from November until the end of 2023.

Russia continues to supply the global market with its oil despite an EU ban and G7 price cap imposed over its invasion of Ukraine, which put prices under pressure.

Lending some support to oil prices, the US dollar index has fallen by 1.3% in January so far. A weaker dollar makes crude less expensive for non-US buyers.

Reuters