Oil prices dropped on Monday, as projected interest rate increases by major central banks and powerful Russian exports increased Middle East tension following a drone assault in Iran and expectations of higher Chinese demand.
Investors anticipate a rate increase of 25 basis points from the Federal Reserve of the United States on Wednesday, led by half-point rises by the Bank of England and European Central Bank.
According to City Index analyst Fiona Cincotta, “the risk-off cautious mood in the market ahead of the central bank meetings is hurting risk assets, including oil.”
By 1325 GMT, Brent crude declined 27 cents, or 0.3%, to $86.39 a barrel and U.S. West Texas Intermediate crude dropped 30 cents, or 0.4%, to $79.38.
Signs of strong Russian supply also impacted the market, despite the European Union ban and G7 price cap set in response to Russia’s invasion of Ukraine. For the first time in three weeks, both oil benchmarks ended the week with losses.
On Wednesday, important ministers from the OPEC+ will meet in addition to the central bank conferences. There is a small possibility that the oil production policy will be changed at Wednesday’s OPEC+ meeting.
“The boat is not really in stormy seas right now. So why rock something that’s not moving about as it is,” said the head of commodity strategy at Saxo Bank, Ole Hansen.
Oil trader PVM predicted that OPEC+ would not change its oil strategy, but stated that the group may “surprise markets with a small cut.”
Oil prices increased early Monday as a result of rising tensions following a drone attack in Iran.
A senior portfolio manager for 8VantEdge in Singapore, Stefano Grasso, has warned that any escalation in Iran has the potential to interrupt crude flow.
Original source material for this article taken from here
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