Oil Dips Ahead of Fed Rate Decision, Anticipated U.S. Crude Build By Investing.com



©Reuters.

By Barani Krishnan

Investing.com – Oil prices fell a day ahead of a Federal Reserve rate decision that is likely to see the United States make a third straight rate hike.

It also rose for the third time in four sessions, adding weight to oil prices as industry analysts forecast a third straight weekly increase in domestic crude inventories.

Bet the Fed will hike rates for a third straight session when it meets on Wednesday to curb inflation. Those expectations weighed on all risk assets Tuesday, including stocks, with Wall Street’s key indices from to and all down nearly 2% each.

“The dollar is key and the Fed is key; They will nullify demand for anything inflationary,” said Robert Yawger, director of energy futures at Mizuho in New York, in comments transmitted by Reuters.

Also Read :  Leicester Violence proves that the Pandemic of Hate won't respect boundaries Opinion

The Fed isn’t the only one considering higher rates – central bank policymakers in , and will also meet later in the week as the global fight against inflation intensifies. However, China left interest rates unchanged on Tuesday as the world’s second-largest oil consumer seeks to offset sluggish economic growth against its flagging yuan currency.

“Energy traders are anticipating a wrath from central bank decisions that will trigger mid-cycle slowdowns that will cripple the near-term outlook for crude oil demand,” said Ed Moya, an analyst at online trading platform OANDA. “Commodities are broadly weaker as this week is all about aggressive monetary tightening to fight inflation.”

Also Read :  U.S. citizen allowed to leave Iranian prison for a week

New York-traded crude, which serves as the US crude benchmark, fell $1.28, or 1.5%, to $84.45 a barrel after a session low of $83.03.

the London-traded global benchmark for oil fell $1.38, or 1.5%, to $90.62 a barrel from its daily low of $89.83.

Also weighing on oil was data from the US Department of Transportation, which showed domestic vehicle travel fell 3.3% to 286.6 billion miles in July, the second straight monthly decline in American driving amid high fuel prices.

Market participants, meanwhile, are keeping an eye out for the weekly US Oil Inventory data, which is due after market settlement from either API or the American Petroleum Institute.

Also Read :  Bhutan bets on sustainable travel and increases daily tourist tax to $200

API will release a snapshot of closing balances for US Crude Oil, Gasoline and Distillates for the week ended September 16 at approximately 4:30 PM ET (20:30 GMT). The numbers serve as a precursor to official inventory data from the same, which is due from the US Energy Information Administration on Wednesday.

For the last week, analysts tracked by Investing.com expect the EIA to report an increase of 2.161 million barrels, up from the 2.442 million barrel increase reported in the week ended September 9th.

On the front end, consensus is down 431,000 barrels from the previous week’s 1.767 million barrel drop.

It is expected to rise by 420k barrels from last week’s gain of 4.219m.



Source link