Image: Reuters Berita 24 English - On Monday, oil prices fell because investors worried that aggressive U.S. interest rate hikes could hur...
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| Image: Reuters |
Berita 24 English - On Monday, oil prices fell because investors worried that aggressive U.S. interest rate hikes could hurt the global economy and lower demand for fuel. A stronger dollar also hurt.
By 9:00 GMT, Brent crude futures for October delivery dropped $1.60, or 1.6%, to $95.12 a barrel.
Futures contracts for September delivery of U.S. West Texas Intermediate (WTI) crude, which end on Monday, were down $1.56, or 1.7%, to $89.21 a barrel.
The more popular October contract was down $1.52, or 1.7%, to $88.92.
Brent and WTI both went up for the third day in a row on Friday, but they both went down for the week by about 1.5% due to a stronger dollar and worries about demand.
A senior economist at Nomura Securities, Tatsufumi Okoshi, said that the drop in oil prices was due to growing worries about a slowdown in the world economy.
"An increase in the value of the U.S. dollar also led to more selling," he said. When the dollar gets stronger, other currencies have to pay more for oil.
On Monday, the dollar index hit its highest level in five weeks. This happened after Richmond Fed President Thomas Barkin said that central bankers were likely to raise interest rates more quickly and at the beginning of the year. [FRX/]
Investors will pay close attention to what Fed Chair Jerome Powell says on Friday at an annual meeting of central bankers from around the world in Jackson Hole, Wyoming.
Prices also went down because people were worried that China, which imports the most oil in the world, would use less fuel. This was partly because a heatwave in the southwest cut off power to a lot of people.
Caixin, a financial news service, said that the province of Sichuan will keep limits on industrial power users until August 25. This is because the province is trying to deal with falling hydropower output and rising demand for electricity from homes.
As a sign that the Chinese government is worried about the economy as a whole, on Monday it cut its benchmark lending rate and lowered the mortgage reference by a bigger amount. This was in addition to the measures it announced last week to help the economy, which has been hurt by a housing crisis and a rise in COVID cases.
The White House said on Sunday that the leaders of the United States, Britain, France, and Germany talked about efforts to bring back the 2015 Iran nuclear deal, which could let sanctioned Iranian oil back onto the market.
