Oil prices up but expected Fed rate hike paints bearish picture

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Oil prices ticked up on Tuesday as OPEC and its allies keep producing less than their quotas, but were headed for a fourth monthly decline ahead of an expected further U.S. interest rate hike which may curb economic growth and fuel demand.

Brent crude futures for November settlement were up 41 cents, or 0.5%, to $92.41 a barrel.

U.S. West Texas Intermediate crude for October delivery was at $85.82 a barrel, up 9 cents. The October contract will expire on Tuesday and the more active November contract was at $85.53, up 17 cents, or 0.2%.

A sign of underlying tight supply, a document from the Organization of Petroleum Exporting Countries and allies led by Russia showed the group fell short of its output target by 3.583 million barrels per day (bpd) in August – around 3.5% of global oil demand.

Meanwhile, the impasse over a revival of the Iran nuclear deal is also continuing to keep that country’s exports from fully returning to the market.

Still, both Brent and WTI are headed for their worst quarterly drops in percentage terms since the beginning of the coronavirus pandemic.

The dollar remained firm near a two-decade high versus major peers on Tuesday, making oil more expensive for holders of other currencies, amid a slew of central bank meetings around the world this week.

While other major economies are tightening, China, the world’s second-largest oil user, on Tuesday left its benchmark lending rates unchanged as it tries to balance supporting its sluggish economic growth against the weakening yuan.

The U.S. Federal Reserve on Wednesday is likely to raise interest rates by another 75 basis points to rein in inflation




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