Oil Prices Drop As Fed Rate Hike Concerns Resurface| MENAFN.COM

Thursday, 02 February 2023 06:05 GMT

Oil Prices Drop As Fed Rate Hike Concerns Resurface


(MENAFN- Trend News Agency)

Oil prices dipped on Monday as upbeat U.S. economic data rekindled concerns over aggressive rate hikes by the Federal Reserve, trend reports citing euronews .

The West Texas Intermediate (WTI) for January delivery lost 3.05 U.S. dollars, or 3.8 percent, to settle at 76.93 dollars a barrel on the New York Mercantile Exchange. Brent crude for February delivery dropped 2.89 dollars, or 3.4 percent, to close at 82.68 dollars a barrel on the London ICE Futures Exchange.

The above market reactions came after data showed activity in the U.S. services sector came in stronger than expected for November.

The Institute for Supply Management reported on Monday that the U.S. services PMI (Purchasing Managers' Index) registered 56.5 percent last month, up from the October's reading of 54.4 percent. Numbers over 50 percent indicate expansion in the sector. Economists polled by The Wall Street Journal had expected the index to drop to 53.7 percent.

The data raised concerns that the Fed may have to keep tightening policy for longer to cool the economy, experts noted.

Traders also digested a key decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+.

The oil alliance on Sunday agreed to stick to its existing policy of reducing oil production by 2 million barrels per day from November until the end of 2023 amid market uncertainties.

For the week ending Friday, the WTI advanced nearly 4.9 percent, while Brent rose 2.2 percent, based on the front-month contracts.

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