Oil prices slumped as concerns over Chinese fuel demand and rising Russian crude supplies weighed on the market as investors tried to gauge appetite for more rate hikes ahead of Monday’s Federal Reserve meeting.
Brent crude futures were down 70 cents, or 0.94%, to $74.09 a barrel as of 0647 GMT. West Texas Intermediate (WTI) crude was down 0.91% to trade at $69.53.
Chinese economic data raised concerns about rising demand in the world’s largest importer of crude oil. Saudi Arabia, which promised to cut output by 1 million barrels a day in July, offset the rise in prices. Both benchmarks posted their second straight week of declines last week.
The Fed’s rate hikes strengthened the dollar, making dollar-denominated commodities more expensive for holders of other currencies and putting pressure on prices. Oil prices struggle to rise until the Fed relaxes the money supply.
Most market participants expect the US central bank to keep interest rates unchanged when it wraps up its two-day monetary policy meeting on Wednesday.
Now all eyes are focused on two main factors that will affect the direction of oil prices. First, Tuesday’s US inflation reading will be closely scrutinized by market participants to look for clues about the overall economic environment. Second, the Fed’s policy outlook for the coming year will shape the course of oil prices.
Russia’s oil exports to China and India increased despite the embargo of the European Union that started in early December and the price ceiling mechanism of the Yediler Group.
Oil price forecasts were lowered due to higher-than-expected supplies from Russia and Iran, and 2024 supply forecasts for the two producers and Venezuela increased by a total of 800,000 barrels per day.
The December crude oil price forecast fell from $95 to $86 for Brent and $89 for WTI to $81.
