Crude oil futures closed more than 5% lower on Tuesday (Aug. 30) as investors worried that a global central bank rate hike could lead to a slowdown in oil demand. The market was also pressured by news that Iraq is ready to increase crude exports to Europe
- WTI crude futures fell $5.37, or 5.5%, at $91.64 a barrel.
- BRENT crude futures fell $5.78, or 5.5%, at $99.31 a barrel.
Crude oil futures fell amid concerns about slowing oil demand. Central banks around the world, including the Federal Reserve (Fed) and the European Central Bank (ECB), signaled they would raise interest rates to curb inflation.
The Estonian central bank chief said the ECB should raise interest rates by 0.75% at its Sept. 8 meeting to curb rising inflation. Inflation in the eurozone is now four times the ECB’s 2% target.
The ECB committee also said that the ECB should tighten monetary policy further to contain inflation and raise interest rates by at least 0.50% in September, although this could have an impact on the economy, which is facing a severe recession.
The market also came under pressure after Iraqi state-owned SOMO said it was ready to increase crude exports to Europe if needed.
SOMO has increased its oil exports to Europe since June after some Asian countries such as China and India decided to buy cheap oil from Russia. At the same time, Europe imposed sanctions on Russian oil after Russia ordered troops to invade Ukraine in February.
Investors are waiting for the OPEC and OPEC+ meeting on September 5.
Investors are also waiting for the crude oil inventories published today by the US Energy Information Administration (EIA).
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Wednesday, August 31, 2022