Image: Reuters Berita 24 English - Oil prices stayed the same on Tuesday because investors were worried that more interest rate hikes in the...
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| Image: Reuters |
By 6:59 GMT, Brent crude futures for November delivery dropped 7 cents, or 0.1%, to $91.93 per barrel.
The price of a barrel of U.S. West Texas Intermediate crude for delivery in October went down by 13 cents, or 0.2%, to $85.60. The contract for October will end on Tuesday, and the more active contract for November was at $85.15, which was down 21 cents, or 0.3%, from the previous price.
On Tuesday, the dollar held steady below a 20-year high compared to other major currencies. This was before a week of meetings by central banks around the world, led by the U.S. Federal Reserve, which is likely to raise interest rates by another 75 basis points to slow down inflation.
The stronger dollar makes oil priced in dollars more expensive for people who don't use dollars, and the expected rate hikes have made people worry that the tightening could cause a global recession.
"Since the middle of June, oil prices have been on a downward trend," said Tina Teng, an analyst at CMC Markets. "Recession fears and a slowdown in growth in China are still the main bearish factors in general."
While other major economies are tightening, China, which uses the second most oil in the world, kept its benchmark lending rates the same on Tuesday. This is because China is trying to support its slow economic growth without hurting the yuan.
In a note, Edward Moya, a senior market analyst at OANDA, said that fears of aggressive central bank tightening are still causing people to worry about a "quickly weakening global economy" and putting pressure on crude prices.
A preliminary Reuters poll on Monday showed that U.S. crude oil stocks rose by about 2 million barrels in the week ending September 16.
The U.S. Energy Department will sell up to 10 million barrels of oil from the Strategic Petroleum Reserve for delivery in November. This is part of a plan to sell 180 million barrels from the stockpile to keep fuel prices down.
Prices did get a little boost from signs that big producers won't be able to meet their output goals.
An OPEC+ document showed that the group fell short of its oil production goal by 3.583 million barrels per day (bpd) in August. In July, the group fell short of its goal by 2,892,000 bpd.
The lack of progress on getting the Iran nuclear deal back on track is also keeping that country's exports from coming back to the market in full.
Russia said on Monday that there were still unresolved issues in the talks, while France's foreign minister said that it was up to Tehran to make a decision because time was running out to find a solution.
But they are signs that this year's higher oil prices are making people less likely to buy it. July was the second month in a row that the number of vehicle trips in the U.S. went down.
