Oil down over demand woes ahead of Fed meeting

Oil prices extended losses from last week on Monday over demand concerns ahead of the US Federal Reserve’s two-day meeting to agree on an interest rate hike to tame record-high inflation.

International benchmark Brent crude was trading at $97.38 per barrel at 10.05 a.m. local time (0705 GMT) for a 1.01% decrease after the previous session closed at $98.38 a barrel.

American benchmark West Texas Intermediate (WTI) was at $93.65 per barrel at the same time for a 1.11% loss after the previous session closed at $94.70 a barrel.

While global macroeconomic data show signs of recession, uncertainty ahead of the US Federal Reserve’s (Fed) monetary policy on Wednesday is fueling weak demand concerns and putting downward pressure on prices.

After raising interest rates by 75 basis points in June, the Fed is widely expected to keep the basis point rate hike at 75.

China’s strict COVID policies are also crippling demand in the world’s second-largest, oil-consuming country in support of lower prices.

Crude oil prices, which are indexed to the US dollar, also came under pressure with the rising value of the greenback.

The US dollar index, which measures the value of the American dollar against a basket of currencies including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, rose 0.02% to 106.75.

Adding to supply worries and limiting price declines, Russian Central Bank Governor Elvira Nabiullina said last week that Russia would not supply oil to countries in the EU and US that intend to impose a price cap on Russian oil.

Supply-side worries were eased after Libya’s National Oil Corporation (NOC) announced plans on Saturday to restore output to 1.2 million barrels per day (bpd) in two weeks.