Singapore, October 11 (BNA) Oil prices fell today, Tuesday, to extend their losses by about 2% in the previous session, as the rise of the US dollar and the escalation of coronavirus cases in China led to fears of slowing global demand.
Brent crude futures were down 27 cents, or 0.3 percent, at $95.92 a barrel by 03:42 GMT, after falling $1.73 in the previous session.
US West Texas Intermediate crude was $90.73 a barrel, down 40 cents, or 0.4%, after losing $1.51 in the previous session.
The dollar rose on Tuesday, with concerns about rising interest rates and geopolitical tensions fretting investors.
A strong dollar reduces the demand for oil by making it more expensive for buyers who use other currencies.
Federal Reserve Vice Chairman Lyle Brainard said on Monday that interest rate increases so far are starting to slow the economy and won’t feel the full burden of a tighter policy for the coming months.
“Strong jobs data has boosted expectations for another 75 basis point rate hike at next month’s Federal Reserve meeting, leaving downside risks to global oil demand,” ANZ Research analysts said in a note.
Analysts added that China’s ongoing zero-COVID-19 policy ahead of the Communist Party Congress “is not helping” demand.
Cases of COVID-19 in the world’s second largest oil consumer have risen to their highest levels since August. Its service activity shrank in September for the first time in four months, as pandemic restrictions weighed.
Thousands of cases caused by the highly prevalent omicron BF.7 sub-variant have been reported in Inner Mongolia since the beginning of October, turning the region into the country’s newest epicenter of the COVID epidemic.
To limit losses, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, decided last week to cut production target by two million barrels per day, raising concerns about shrinking oil supplies.
“More importantly is the bullish signal that OPEC+ is sending here by responding to short-term market dynamics and trying to stabilize or raise prices despite the median view that demand growth will outpace supply growth for the rest of the year,” said Stephen Innes, Managing Partner. In SPI Asset Management.
“We’ve taken a back-and-forth in trying to assess this week’s weak economic demand versus a tight market,” Innes added.
HF