photo of oil rig platform

Crude oil loses more than $3 on concerns about slowing global demand

Crude oil futures closed down more than 3% on Thursday (Sept. 15), with markets pressured by the strong dollar amid fears that the acceleration of interest rate hikes by the Federal Reserve (Fed) and central banks around the world would hurt the global economy and oil demand.

  • WTI crude futures fell $3.38, or 3.8%, at $85.10 a barrel. This is the lowest closing level since Sept. 8.
  • BRENT crude futures fell $3.26, or 3.5%, at $90.84 a barrel.

The dollar index rose again against the 6 major currencies in a basket of currencies to 109.7400, making dollar-denominated crude oil contracts more expensive for investors holding other currencies.

Investors are concerned that accelerated rate hikes by the Fed and global central banks, including the European Central Bank (ECB), will push the global economy to the brink of recession and hurt oil demand.

The latest data from the CME Group’s FedWatch tool shows that investors are now 80% expecting the Fed to raise rates by 0.75% to 3.00-3.25% at its September 20-21 meeting, and 20% expecting the Fed to raise rates by 1.00%.

Oil markets are also under pressure as the International Monetary Fund (IMF) and World Bank warned in a report that the global economy is on the brink of recession as central banks around the world raise interest rates to curb inflation.

The International Energy Agency (IEA) warned that global oil demand growth would slow in the fourth quarter, due to a slowdown in the economies of China and the Organization for Economic Cooperation and Development (OECD) countries.

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Friday, September 16, 2022

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