NEW YORK: Oil prices eased about 1% to a three-week low on a rising US dollar and after the US Federal Reserve (Fed) kept interest rates steady as expected but noted it would keep the door open to possible future rate increases due to a strong US economy.
Interest rate increases can slow economic growth and dampen oil demand. A strong dollar makes it more expensive to buy fuel using other currencies, pressuring prices.
Brent futures fell 39 cents, or 0.5%, to settle at US$84.63 (RM403.76) a barrel. US West Texas Intermediate (WTI) crude fell 58 cents, or 0.7%, to US$80.44 (RM383.78).
That was the lowest settlement for Brent since Oct 6 and WTI since Aug 28. Both contracts settled below their 100-day moving averages, a key level of technical support since July.
Trade was choppy, with both benchmarks up over US$2 a barrel early on Middle East worries.
The Fed, which started raising interest rates in March 2022, held rates steady but left the door open to a further increase due to a strong US economy.
The US dollar rose to a four-week high against a basket of other currencies. Crude futures were also pressured by an increase in US crude stocks and petrol inventories last week as refiners undergoing seasonal maintenance restarted units more slowly than expected to avoid even larger petrol stock builds.
In Europe, October inflation in the eurozone was at its lowest in two years, a Eurostat flash reading showed, stoking the view the European Central Bank is unlikely to raise interest rates soon. The Bank of England is expected to meet on Thursday.
In China, the world’s largest oil importer, factory activity unexpectedly contracted in October, a private survey showed, adding to downbeat official figures from a day earlier.
“The oil market will remain fixated with the deteriorating demand outlook and if any of the latest developments with the Israel-Hamas war will lead to any supply disruptions,” Edward Moya at Oanda said.
Callum Macpherson, head of commodities at Investec, said that if there is no threat to output from the war, “oil may struggle to sustain prices around recent highs without support from Opec+ into 2024, making their meeting later this month crucial.” – Reuters
Source: The Sun Daily
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