Oil prices fell more than 1% on Tuesday, touching a two-week low on the prospect of further interest rate hikes, a stronger U.S. dollar, and heavy flows of Russian crude.
Brent crude oil futures were $1.13, or 1.33%, lower at $83.77 a barrel, touching their weakest level since Jan. 13.
The March contract finishes on Tuesday, and the more heavily traded April contract fell $1.06, or 1.26%, to $83.42.
Accordingly, U.S. West Texas Intermediate (WTI) crude futures were $1, or 1.555%, lower at $76.72 a barrel, falling to their lowest target since Jan. 11.
Central banks and the OPEC+ producers will act in the coming days. Interest rate decisions shed light on the outlook for the economy and the oil demand system.
Investors anticipate that the U.S. Federal Reserve will hike interest rates by 25 basis points on Wednesday, along with the Bank of England and the European Central Bank, who will each boost rates by half a point.
The U.S. dollar rose on Tuesday ahead of central bank decisions that made oil more pricy for overseas buyers, which could weaken oil demand. High rates could also slow the global economy.
What the Future Holds for Oil
The existing output policy of the Organization of the Petroleum Exporting Countries (OPEC) should remain unaltered.
Further bearish sentiment followed news that Russian oil loading from the port of Ust-Luga is expected in early February, despite Western sanctions imposed over the invasion of Ukraine.
China’s recovery fuels the outlook for oil demand, while supply remains uncertain due to future sanctions on refined Russian products.
Analysts expect Brent to be above $90/barrel this year, the first upward revision since the October survey.
The extent of China’s oil recovery after the end of its zero-COVID restrictions and the response of Russian liquid production to Western sanctions will affect the oil balance sheet.
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