Oil Dips On Demand Worries As More Rate Hikes Likely
Date
6/25/2023 3:01:04 AM
(MENAFN- the peninsula) the peninsula
doha, qatar: oil prices settled lower yesterday, posting a weekly decline as traders worried interest rate hikes could sap demand despite signs of tighter supplies including lower us crude stocks. in a second straight day of losses, brent crude closed 29 cents down to $73.85 a barrel.
wti crude fell 35 cents to $69.16. on thursday, brent dropped about $3 a barrel after the bank of england raised interest rates by a bigger-than-expected half a percentage point. central banks in norway and switzerland also hiked rates. the benchmarks declined more than 3.5 percent for the week.
more us interest rate hikes also seemed likelier. san francisco federal reserve bank president mary daly said two more rate hikes this year was a“very reasonable” projection.
higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand. risk-aversion among investors also boosted the value of the us dollar, which pressures oil prices by making the commodity more expensive for other currency holders.
us business activity also fell to a three-month low in june as services growth eased for the first time this year and the contraction in the manufacturing sector deepened.
asian lng prices were down last week but remained 33 percent up from its lowest level in june, tracking gas prices in europe where ample inventories keep demand muted.
the average lng price in asia fell by 11 percent from the previous week to $12 per mmbtu, industry sources estimated. competition between europe and asia has been re-igniting as asian buyers return to the market to take advantage of this year's lower prices and european buyers need to ensure sufficient cargoes to continue storage injections, analysts said.
in europe, expectations of weaker gas supply in the short-term due to norwegian outages have pushed traders to cover short positions, but the return of some production and sufficient gas inventories have helped keep the market muted.
in the us, gas futures jumped about 5 percent to a 16-week high yesterday on a drop in us output in recent weeks and forecasts for the weather to remain hot through early july, especially in texas.
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