Oil prices fell for a second day on worries about an expected slowdown

On this chart for July 24, 2022, oil barrel patterns are seen in front of a rising stock chart. REUTERS/Dado Ruvic/Illustration

Sept 26 (Reuters) – Oil prices fell for a second day on Monday as global interest rates rose, an expected global slowdown dampened fuel demand and curbed non-dollar consumers’ ability to buy crude.

Brent crude for November settlement was down $1.35, or 1.57%, at $84.80 a barrel by 0640 GMT. The contract fell to $84.51, its lowest since Jan. 14.

US West Texas Intermediate (WTI) crude futures for November delivery were down $1.15, or 1.46%, at $77.59. WTI fell to $77.21, its lowest since Jan. 6.

Both contracts fell about 5% on Friday.

The dollar index, which measures the greenback against a basket of major currencies, hit a 20-year high on Monday.

A strong greenback tends to reduce demand for dollar-denominated oil because buyers using other currencies have to spend more to buy crude.

Central banks in countless oil-consuming countries, including the world’s biggest crude user, the United States, have raised interest rates to combat rising inflation.

“A backdrop of global monetary policy tightening by major central banks to curb high inflation and a spectacular run in the greenback in more than two decades has raised concerns about an economic slowdown and is acting as a key headwind for crude oil prices,” said Sukanda Sachdeva, vice president of commodity research at Relicare Broking.

Sachdeva expects WTI prices to find a floor at $75 a barrel, while $80 for Brent will act as a cushion.

Oil market disruptions from the Russia-Ukraine war have provided some support to prices as European Union sanctions on Russian crude begin in December.

Russell Hardy, chief executive of energy trader Vitol, said fuel exports expected to go to Asia and the Middle East would be affected as Russia’s oil supplies go to Europe.

In addition, Hardy said at an oil conference in Singapore that one million barrels per day (bpd) of US crude oil is expected to go to Europe to fill the gap in Russian supplies. read more

The head of Colombian state energy company Ecopetrol said at the same conference that it would sell more oil to Europe instead of Russian supplies, while seeing growing competition for market share in Asia. read more

Attention has turned to what the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, led by Russia, might do when they meet on October 5 after agreeing to modestly cut output at their last meeting.

But with OPEC+ producing below its target output, any announced cuts will not have much of an impact on supply.

Data last week showed OPEC+ missed its target by 3.58 million bpd in August, a bigger shortfall than in July. read more

Mohi Narayan in New Delhi, Sonali Paul in Melbourne; Editing by Ana Nicolaci da Costa and Christian Schmollinger

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