Alghadeer TV Alghadeer TV
Oil prices fell on Tuesday, amid fears that demand for fuel will be affected by major central banks keeping interest rates high for a longer period, even as supply is expected to tighten.
Brent crude futures fell 38 cents to $92.91 a barrel by 0400 GMT, while US West Texas Intermediate crude futures fell 34 cents to $89.34.
The world’s top economic policymakers, the US Federal Reserve and the European Central Bank, have reaffirmed in recent days their commitment to fighting inflation, indicating that tight policy may last longer than previously expected. High interest rates slow economic growth, reducing demand for oil.
Separately, Moody’s said on Monday that a US government shutdown would hurt the country’s credit, a warning that comes one month after Fitch downgraded the US rating by one notch on the back of the debt ceiling crisis.
While supply remains tight with Russia and Saudi Arabia extending production cuts until the end of the year, Moscow on Monday eased its temporary ban on gasoline and diesel exports, which had been issued separately to stabilize the domestic market.
With the Golden Week holiday starting in China from Sunday, oil prices may get a boost from higher travel and the resulting demand for petroleum products from the world’s second-largest oil consumer.
Oil prices have risen about 30% since mid-year mostly driven by supply shortages, wiping 0.5 percentage points off global GDP growth in the second half of this year, according to JPMorgan.
JPMorgan added in a note that the shock “is not large enough to threaten the expansion by itself,” according to Reuters.
“We expect $94 a barrel during the last quarter of 2023 which is the maximum steepness of the curve we see before OPEC likely eases supply constraints,” said Baden Moore, head of carbon and commodities strategy at National Australia Bank.
