Crude oil futures closed lower on Tuesday after three consecutive gains as higher-than-expected US inflation data strengthened the dollar and raised the prospect of interest rate hikes, which could dampen energy demand.
prices of energy raw materials
- Delivered in October Raw WTIFutures fell 47 cents, or 0.5%, to stand at $ 87.31 a barrel.
- Delivered in November Brent crudeFutures fell 83 cents, or 0.9%, to $ 93.17 a barrel.
- Gasoline futures for October delivery rose 1.5% to stand at $ 2.4804 per gallon.
- Delivered in OctoberFuture on thermal fuelPrices fell 1.7 percent to stand at $ 3.5413 per gallon.
- Natural gas futures for October delivery rose 0.4% to stand at $ 8,284 per million Btu.
driving force of the market
The latest inflation data in the US strengthened the dollar, weighing on dollar-denominated oil prices. ICE US dollar indexIt increased 1.3% to 109.771.
Tyler Richey, co-editor of Sevens Report Research, said the “hot” CPI data also increased the likelihood of a 100 basis point rate hike by the Federal Reserve at its September meeting. More aggressive monetary tightening by the Fed in the future “would hinder economic growth and ultimately affect broad consumer demand, including demand for refined petroleum products.”
Data on Tuesday showed that the consumer price index (CPI) rose 0.1% in August, after economists interviewed by the Wall Street Journal had expected the consumer price index to drop by 0. 1%. Core CPI, which excludes food and energy prices, rose 0.6% in August, compared to Wall Street expectations for a 0.3% rise.
The data showed that inflation more broadly across the economy would also spur another steep rate hike from the Fed.
“At the moment there are many other factors affecting the oil market, including China’s blockade measures, the ongoing war between Russia and Ukraine, the increasingly pressing energy crisis in Europe and a very strong dollar.”
However, “monetary policy expectations are likely to still dominate energy markets and most asset classes globally ahead of next week’s Fed meeting,” Richey said.
Crude oil gained support early Tuesday as US Secretary of State Antony Blinken joined France, the UK and Germany in expressing doubts about the prospect of a near-term recovery from the Iran nuclear deal, weighing on supplies. of Iranian crude oil, Commerzbank commodity analysts wrote in a report The likelihood of volume flowing to the market decreases.
Meanwhile, disappointing data on producers’ exports are also in focus.
Nigeria’s oil exports have halved in three years, Commerzbank analysts said, citing data from Petro-Logistics, while Kazakh exports will plummet to a six-year low next month, according to Bloomberg’s analysis.
Analysts questioned whether the market trend “has turned upward in a lasting way”.
“If the monthly report from the International Energy Agency (IEA) on Wednesday warns that the oil market is severely oversupplied, sentiment could change rapidly again: in this case, the market could check whether OPEC + is really willing. to cut production to defend high prices, ”analysts wrote.
The Organization of Petroleum Exporting Countries (OPEC) kept its forecast for global oil demand growth in 2022 and 2023 unchanged in its monthly report on Tuesday.
Meanwhile, Morgan Stanley analysts have downgraded theirs Raw WTIAnd Brent crudeshort-term price expectations. Currently active Brent crudeThe fourth quarter price forecast drops to $ 95 a barrel from $ 100; Raw WTIThe fourth quarter price forecast was lowered to $ 91 per barrel from $ 97.50.
“The structural outlook for the oil market remains tight, but for now, headwinds in cyclical demand offset it,” Morgan Stanley analysts wrote in a statement Monday. But they see a start to the second quarter of 2023 to see the market go strong again.
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