The price of oil falls ahead of this week’s interest rate hikes
The price of oil fell ahead of several global interest-rate decisions expected to result in further tightening of monetary policy.
It is expected that the Fed will raise interest rates this week from 2.5% to 3.25% (0.75% hike) as well as other central banks from Europe to Asia to combat rampant inflation that’s stifling demand. As liquidity thinned, price swings became more volatile, while a stronger dollar added to the pressure.
Last week, Oil price hitted prior low of $81.72 and settled near $85 a barrel, taking cues from declining equity markets that minimally trimmed losses later in the day. As the Federal Reserve sets to raise interest rates this week, the US stock market seems to be under pressure, which seems to be causing crude prices to be capped.
Since early June, crude has lost about a third of its value, wiping out all the gains made after Russia invaded Ukraine. The potential for increased supply has also weighed on the outlook. In November, the US will offer an additional 10 million barrels of oil from its strategic reserves, ahead of a planned ban on Russian crude by the EU and China’s continued Covid-19 lockdowns are all adding pressure to the commodity.
The market is also considering the possibility of higher Iranian crude flows if protracted talks on reviving a nuclear deal succeed. During a press conference, Foreign Ministry spokesman Nasser Kanaani said discussions on reviving an accord in New York are “a possibility.”
This Wednesday morning oil is trading below $84 a barrel. Trading opportunity, Investors may sell oil price at $85 by protecting stop-loss at $87 and taking profit at $82 a barrel.