Oil falls to a 7-month low on renewed demand fears and rate hike expectations

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An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol/File Photo

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SINGAPORE, Sept 7 (Reuters) – Oil prices fell more than $1 on Wednesday to their lowest level since before Russia invaded Ukraine as COVID-19 curbs China’s top crude importer and that expectations of further interest rate hikes have raised concerns of a global economic recession and decline. fuel request.

Brent crude futures fell $1.35, or 1.5%, to $91.48 a barrel at 0420 GMT after falling 3% in the previous session. The contract hit a session low of $91.35, the lowest since Feb. 18.

US West Texas Intermediate crude futures fell $1.55, or 1.8%, to $85.33. The benchmark fell to a session low of $85.17, the lowest since Jan. 26.

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Oil pared back big gains on Monday after the Organization of the Petroleum Exporting Countries (OPEC) and their allies, a group known as OPEC+, decided to cut production by 100,000 barrels a day in October. . Read more

“Snagging the rebound from the OPEC+ production cut wasn’t that hard to do given the long list of global economic challenges,” Edward Moya, senior market analyst at OANDA, said in a note. .

“Despite better than expected U.S. services data, global growth doesn’t look good at all and that’s a problem for crude prices.”

A strong U.S. dollar, aggressive rate hikes, soaring bond yields and slowing Chinese growth are factors putting pressure on oil prices, said CMC Markets analyst Tina Teng.

“In short, oil futures markets are forecasting ‘stagflation’ in the global economy,” Teng added.

China’s strict zero-COVID policy has kept cities like Chengdu, with 21.2 million people, under lockdown, curbing the movement of people and demand for oil in the world’s second-largest consumer. Read more

Both the country’s exports and imports lost momentum in August, with growth significantly below expectations. Crude oil imports fell 9.4% in August from a year earlier, customs data showed on Wednesday, as outages at state-owned refineries and lower operations at independent plants amid weak margins capped purchases. Read more

Investors are also watching for further interest rate hikes to curb inflation. The European Central Bank is expected to raise rates sharply at its meeting on Thursday. After the ECB meeting, a US Federal Reserve meeting will follow on September 21. read more

The dollar hit a 24-year high against the yen and hit new highs against the Australian and New Zealand dollars on Wednesday after US economic data bolstered the view that the Federal Reserve will continue aggressive policy tightening . [nL1N30E024]

However, expectations of tighter US oil inventories provided some support for prices.

U.S. crude inventories are expected to have fallen for the fourth consecutive week, falling by about 733,000 barrels in the week to Sept. 2, a preliminary Reuters poll showed on Tuesday.

Crude inventories in the U.S. Strategic Petroleum Reserve (SPR) fell 7.5 million barrels in the week of September 2 to 442.5 million barrels, their lowest since November 1984, data from the Department of Energy. Read more

Weekly U.S. inventory reports from the American Petroleum Institute and the Energy Information Administration will be released on Wednesday and Thursday, respectively, a day later than usual due to a Monday holiday.

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Reporting by Isabel Kua in Singapore; Editing by Christian Schmollinger and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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