Oil takes a breather ahead of Fed and ECB decisions

SINGAPORE, July 24 (Reuters) – Oil prices fall on Monday as investors await further signs of interest rate hikes from US and eurozone central banks, with limited supply and China’s hopes of a stimulus to keep Brent at $80.

Brent crude oil futures fell at 08:50 Moscow time by 0.26% to $80.86 a barrel, WTI – fell 0.26% to $76.87 a barrel.

Both indexes rose 1.5% and 2.2% respectively last week, posting a fourth consecutive week of gains amid expectations of OPEC+ production cuts.

“Although another Fed rate hike this week could cause short-term price volatility, we expect the market to tighten due to OPEC supply cuts and growing speculation about further economic stimulus in China that will push prices higher in the third quarter of 2023.” – wrote analysts of the National Australian Bank.

Investors have already priced in a quarter of a percentage point rate hike by the Fed and the ECB this week, so the markets’ attention will focus on the statements of the heads of regulators – Jerome Powell and Christine Lagarde – on the future change in monetary policy.

Rising interest rates have reduced investment and strengthened the dollar, making oil less attractive to holders of other currencies.

UAE Energy Minister Suhail Al Mazrouei told Reuters on Friday that OPEC+’s current efforts to support the oil market are sufficient for now, and the group is “only on call” if further steps are needed.

U.S. energy companies reduced the number of oil and gas rigs for the second straight week last week, Baker Hughes Co. said on Friday.

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(Florence Tan and Emily Chow)


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