Oil falls 1% as rate hikes loom

Oil prices extended losses on Monday as looming increases to interest rates by major central banks and signs of strong Russian exports offset Middle East tension over a drone attack in Iran and hopes of higher Chinese demand.

Investors expect the US Federal Reserve to raise rates by 25 basis points on Wednesday, followed the day after by half-point increases by the Bank of England and European Central Bank. Any deviation from that script would be a shock.

“We’re seeing a ‘risk back off’ sentiment from the past two weeks’ rally on ideas that higher interest rates may slow demand more quickly,” said Dennis Kissler, Senior Vice President of trading at BOK Financial.

Brent crude futures for March delivery fell 95 cents to $85.71 a barrel, a 1.1% loss, by 1736 GMT. US crude fell 70 cents, or 0.9%, to $78.98 per barrel.

Published in The Express Tribune, January 31^st, 2023.

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