Business News Asia
Crude oil futures closed at their lowest level in almost 9 months on Monday (September 26) in volatile trading. The market was influenced by the strength of the dollar. This was compounded by fears that the U.S. Federal Reserve’s (Fed) rate hike will impact the economy and oil demand.
- WTI crude futures fell $2.03, or 2.6%, at $76.71 a barrel.
- BRENT crude futures fell $2.09, or 2.4%, at $84.06 a barrel.
The dollar index rose 0.81% against the six major currencies in a basket of currencies to 114.1030. The appreciation of the dollar made dollar-denominated crude oil contracts more expensive for investors holding other currencies.
Investors are also concerned that the Fed’s accelerated rate hikes could plunge the economy into recession and hurt oil demand. Investors now expect the Fed to raise rates by 0.75% at its November meeting and by another 0.50% on October 5 if the Fed raises rates as expected. This would make it four consecutive times the Fed has raised rates by 0.75%.
Investors are waiting to see the impact of European Union (EU) sanctions on oil from Russia. The measures will come into force in December.
The meeting of OPEC and OPEC+ on October 5, where the production policy for November will be determined, should also be kept in mind.
At the OPEC meeting on September 6, a production cut of 100,000 barrels per day for October was agreed. This is the first production cut in more than a year to support world oil prices.
The Spot Market is Open
Tuesday, September 27, 2022