Title: Oil extends losing streak on fears Fed hike will dampen fuel demand
Jul 25, 2022 03:01AM ET
Oil prices fell on Monday, extending their recent downward trend, on fears that a rise in US interest rates will reduce demand for fuel.
Brent crude futures for September delivery dropped $1.19, or 1.2 percent, to $102.01 per barrel at 6:45 a.m. MT, down for a fourth day.
West Texas Intermediate crude futures for September delivery in the United States fell $1.33, or 1.4 percent, to $93.37 a barrel, falling for the fourth day in a row.
Oil prices were pressured by growing concerns that aggressive interest rate hikes by the U.S. Federal Reserve would slow the global economy and reduce demand for fuel.
In recent weeks, oil futures have been volatile as traders have sought to reconcile the possibility of further interest rate hikes, which could curb economic activity and thus reduce fuel demand growth, with the supply constraint caused by the disruption to trade in Russian barrels due to Western sanctions amid the conflict in Ukraine.
Fed officials have indicated that the central bank is likely to raise interest rates by 75 basis points at its July 26-27 meeting.
China, the world's second-largest economy, narrowly missed contracting in the second quarter, growing just 0.4 percent on year, weighed down by the COVID-19 lock-up, a weak real estate sector, and cautious consumer sentiment.
The market tone is likely to remain bearish on concerns that the resumption of some crude production in Libya will reduce tight global supply.
Last week, the European Union said it would allow Russian state-owned companies to ship oil to third countries as part of a sanctions adjustment agreed by member states last week and aimed at curbing risks to global energy security.
However, Russian Central Bank Governor Elvira Nabiullina said on Friday that Russia would not supply oil to countries that have decided to impose a price ceiling on their oil.