Oil prices dipped on Tuesday, following other risk assets lower, as the dollar stayed strong and investors anticipated more central bank interest-rate hikes designed to quell inflation.
The US Federal Reserve is likely to raise interest rates by another 75 basis points on Wednesday to rein in inflation. Those expectations are weighing on equities, which often move in tandem with oil prices. Other central banks, including the Bank of England, meet this week as well.
Higher rates have bolstered the dollar, which remained near a two-decade high against peers on Tuesday, making oil more expensive for holders of other currencies.
“The oil market is caught between downward concerns and upside hopes. The concerns are driven by the aggressive monetary tightening in the US and Europe, which is increasing the likelihood of a recession and might weigh on oil demand prospects,” said Giovanni Staunovo, commodity analyst at UBS.
Brent crude futures for November settlement fell by $1.77, or 1.9%, to $90.23 a barrel at 1644 GMT.
Published in The Express Tribune, September 21st, 2022.