Oil prices fell on Tuesday ahead of a speech by US Federal Reserve chair Jerome Powell, where he could confirm further interest rate hikes for the world’s largest consumer.
Both Brent crude oil and West Texas Intermediate (WTI) saw declines as anticipation grows over potential recessions in major economies and rising interest rate hikes threaten to stem demand.
WTI was down 0.64% to US$74.2 per barrel, while Brent had fallen 0.77% to US$79.
Powell is due to speak in Stockholm on Tuesday afternoon, following speculation that Fed Funds rates (the upper and lower rates on money lent to banks overnight) could be upped from a current 4.25-4.5% to 5-5.25% after hawkish comments from Federal Reserve officials.
"I want to be data dependent, not wall-off a 50 basis point increase," said San Francisco Fed President Mary Daly on Monday.
Oil prices had climbed by around 1% early this week in response to China’s easing of covid restrictions and the opening of its borders.
China is the world’s biggest oil importer and second-largest consumer behind the US.
“Focus now shifts to Fed chair Jerome Powell’s address later today for clues into the outlook for US monetary policy,” said Interactive Investor analyst Victoria Scholar.
UBS analysts forecasted oil prices would reach US$100 in the coming months, eventually sitting at US$110 by the end of this year.
Oil “will come out on top in 2023,” predicted the Swiss investment bank, which added demand should exceed 2019 levels and hit new records.