Oil prices deepened their decline on Tuesday afternoon on concerns about global fuel demand and a stronger dollar.
December futures for Brent on London’s ICE Futures exchange fell by $2.14 (2.22%) by 14:30 CST to $94.05 per barrel.
Quotes of futures for WTI for November in electronic trading on the New York Mercantile Exchange (NYMEX) by the specified time fell by $2.28 (2.5%) to $88.85 per barrel.
On the eve of Brent fell 1.8%, WTI – 1.6% after the publication of data that the Purchasing Managers’ Index (PMI) in China’s services sector, calculated by Caixin Media Co. and S&P Global, fell to 49.3 points in September from 55 points in August.
An index value below 50 points indicates a drop in business activity in the service sector. The indicator in the world’s second largest economy and largest importer of fuel fell below this mark for the first time in four months.
Meanwhile, Shanghai and several other major cities in China have ramped up coronavirus testing of residents to the most active level since August and imposed travel restrictions, writes Barron’s. Such measures may be linked to the 20th Congress of the Communist Party of China, which will begin in Beijing on October 16.
Additional pressure on the quotes is exerted by a strong dollar, which continues to strengthen on the statements of the Federal Reserve System management.
By the beginning of next year, the level of the key interest rate in the US may slightly exceed 4.5%, according to the chairman of the Federal Reserve Bank (FRB) of Chicago, Charles Evans. According to him, the Fed will need to keep rates high for some time to cool the economy and the labor market.
Meanwhile, Fed Vice Chair Leil Brainard noted the need for tighter monetary policy to slow inflation, but added that the Central Bank’s decisions will depend on incoming statistical data.
“The Fed is likely to raise rates by another 75 basis points in November, which will strengthen the dollar and limit the rise in oil prices,” Schneider Electric analysts wrote.
