Oil prices ease ahead of Fed, ECB rate hikes

Singapore, July 24 (BNA): Oil prices fell on Monday as traders awaited more signs of rate hikes from US and European central banks, with supply tightening and hopes for Chinese stimulus supporting Brent at $80 a barrel.

Brent crude futures fell 31 cents, or 0.4 percent, to $80.76 a barrel by 0644 GMT. Reuters reported that US West Texas Intermediate crude was $76.74 a barrel, down 33 cents, or 0.4%.

The two benchmarks rose 1.5% and 2.2% respectively last week, the fourth consecutive gain from a week of gains, as supply is expected to contract after the OPEC+ cuts.

“While another Fed rate hike this week could lead to some price volatility in the short term, we expect tightening market conditions around OPEC supply cuts and increased market speculation of more stimulus in China to continue pushing prices higher through Q3 2023,” analysts from the National Australian Bank said in a note.

Investors have priced in quarter-point hikes from the Federal Reserve and European Central Bank this week, so the focus will be on what Fed Chairman Jerome Powell and ECB President Christine Lagarde say about future rate hikes.

Rising interest rates dampened investments and strengthened the dollar, making dollar-denominated goods more expensive for holders of other currencies.

“Another bearish piece of news worth considering is the UAE’s view that the current OPEC+ cuts are sufficient to balance the market,” said Mukesh Sahdev, head of downstream and oil trading at Rystad Energy.

UAE Energy Minister Suhail Al Mazrouei said on Friday that OPEC+ measures to support the oil market are sufficient for now and that the group is “just a phone call away” if any further steps are needed.

In China, market participants expect Beijing to implement targeted stimulus measures to support its ailing economy, likely boosting demand for oil in the world’s No. 2 consumer.

China’s state planner on Monday unveiled measures to promote, encourage and stimulate private investment in some infrastructure sectors, and said it will boost financial support for private projects.

Energy services company Baker Hughes said on Friday that US energy companies last week made the deepest oil rig cuts since early June, with operating units down seven to 530.

MI