Oil prices join sell-off on expected Fed rate hike
Oil prices dipped on Tuesday alongside European and US equities and remain set for a fourth monthly decline on the spectre of an economic slowdown and accompanying drop in fuel demand resulting from an expected jump in US interest rates.
Erasing earlier gains, Brent crude futures for November settlement fell by $1.18, or 1.3%, to $90.82 a barrel at 1353 GMT.
US West Texas Intermediate crude for October delivery was at $84.42, down $1.31. The October contract will expire on Tuesday and the more active November contract was down $1.33, or 1.6%, at $84.03.
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Both Brent and WTI are on track for their worst quarterly drops in percentage terms since the beginning of the coronavirus pandemic. Brent hit about $139 a barrel in March for its highest since 2008.
The dollar remained firm near a two-decade high against its peers on Tuesday, making oil more expensive for holders of other currencies, amid a slew of central bank meetings around the world this week.
The US Federal Reserve is likely to raise interest rates by another 75 basis points on Wednesday to rein in inflation. Those expectations are weighing on equities, which often move in tandem with oil prices.
While other major economies are tightening, China left its benchmark lending rates unchanged on Tuesday as the world's second-biggest oil user tries to balance the bolstering of sluggish economic growth against its weakening yuan currency.
The Bank of England will announce its interest rate decision on Thursday.
US crude oil stocks are estimated to have risen last week by about two million barrels, a Reuters poll showed. US vehicle travel in July fell 3.3% from a year earlier, a second consecutive drop.
The US Energy Department will sell up to 10 million barrels of oil from the Strategic Petroleum Reserve for delivery in November, extending the timing of a plan to sell 180 million barrels from stockpiles to tame fuel prices.
In a sign of underlying tight supply, a document from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia showed that the group fell short of its output target by 3.583 million barrels per day (bpd) in August - about 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 a full return to the market.
