Business News Asia
Crude oil futures closed lower on Tuesday (Sept. 13) as investors worried that higher-than-expected U.S. inflation figures would put pressure on the Federal Reserve (Fed) to raise interest rates, hurting economic activity and slowing oil demand.
- WTI crude futures were down 47 cents, or 0.5%, at $87.31 a barrel.
- BRENT crude futures were down 83 cents, or 0.9%, at $93.17 a barrel.
Oil contracts were initially boosted by news that crude oil inventories in the U.S. Strategic Petroleum Reserves (SPR) fell to 434.1 million barrels, the lowest level since October 1984.
Oil futures then fell as investors feared the Fed would raise interest rates more aggressively at its meeting this month. The U.S. Bureau of Labor Statistics announced that the Consumer Price Index (CPI) rose 8.3% in August from a year earlier. This was above analysts’ expectations for an 8.1% increase.
Some investors expect the Fed to raise interest rates by up to 1.00% at its meeting on September 20-21, following higher-than-expected U.S. consumer price index numbers. 32% of investors believe the Fed will raise rates by 1.00% to 3.25-3.50% at its meeting this month, and 82% believe the Fed will raise rates by 0.75%.
The strength of the dollar has also made dollar-denominated oil contracts more expensive for investors holding other currencies.
The dollar index against the six major currencies in a basket of currencies rose 1.37% to 109.8150.
Investors are waiting for the U.S. crude oil inventories, which the EIA will publish today.
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Wednesday, September 14, 2022