Title : Oil prices inch lower as dollar firms, China COVID worries dent demand

Oct 11, 2022 02:25AM ET

By:AnalysisWatch

Oil prices fell on Tuesday, extending losses of nearly 2% from the previous session, as a strengthening US dollar and a resurgence of COVID-19 cases in China raised fears of slowing global demand.

Brent crude futures were down 21 cents, or 0.2 percent, at $95.98 per barrel as of 0618 GMT, after falling $1.73 the previous session.

U.S. West Texas Intermediate crude was at $90.82 a barrel, down 31 cents, or 0.3%, after losing $1.51 in the previous session.

The dollar hit multi-year highs on Tuesday as worries about rising interest rates and geopolitical tensions unnerved investors. [FRX/]

A strong greenback reduces demand for oil by making it more expensive for buyers using other currencies.

Federal Reserve Vice Chair Lael Brainard said Monday that interest rate increases to date were starting to slow the economy and that the full weight of the tightening policy would not be felt for months.

"Strong employment data has reinforced expectations for another 75 basis point rate hike at next month's Fed meeting, posing a downside risk to global oil demand," analysts at ANZ Research said in a note.

The analysts added that China's sustained zero COVID-19 policy ahead of the Communist Party Congress "is not helping" demand.

EU sanctions on Russian crude and oil products will take effect in December and February, respectively, while the bloc last week gave final approval to a new batch of sanctions against Russia, including a price cap on Russian oil exports.

India maintains a "healthy dialogue" with Russia and will study what is on offer following the announced renewal of ownership of the Sakhalin-1 oil and gas project, Oil Minister Hardeep Singh Puri told Reuters.

On Friday, Russia issued a decree allowing it to seize Exxon Mobil's 30% stake and gave a Russian state-owned company the authority to decide whether foreign shareholders, including India's ONGC Videsh, can keep their stake in the project.