Oil plunges 1%, reversing gains after bearish US economic data

Crude oil storage tanks are seen in an aerial photograph of the Cushing Oil Hub in Cushing, Oklahoma, U.S., April 21, 2020. REUTERS/Drone Base

Join now for FREE unlimited access to Reuters.com

  • Inflation above US central bank’s 2% target
  • Fed officials will meet next Tuesday, Wednesday
  • New COVID-19 restrictions in China weigh on prices
  • Coming soon: API inventory data expected at 4:30 p.m. ET/2030 GMT

HOUSTON, Sept 13 (Reuters) – Oil prices fell about 1% on Tuesday in choppy trading, reversing earlier gains as U.S. consumer prices rose unexpectedly in August, helping the US Federal Reserve to propose another major interest rate hike next week.

Brent crude futures for November delivery fell 78 cents to $93.22 a barrel, a loss of 0.8%, at 1:49 p.m. ET (1749 GMT). U.S. crude fell 54 cents, or 0.6%, to $87.24 a barrel.

The consumer price index gained 0.1% last month after remaining unchanged in July, the US Department of Labor said. Economists polled by Reuters had expected a decline of 0.1%. Read more

Join now for FREE unlimited access to Reuters.com

Fed officials are due to meet next Tuesday and Wednesday, with inflation well above the US central bank’s 2% target.

“The Fed may have to raise rates faster than expected, which could lead to a sense of ‘falling risk’ in crude oil and further strength in the dollar,” said Dennis Kissler, senior vice president of trading. at BOK Financial.

Oil is usually priced in US dollars, so a stronger greenback makes the commodity more expensive for holders of other currencies.

Renewed COVID-19 restrictions in China, the world’s second-largest consumer of oil, also weighed on crude prices.

The number of trips made during China’s three-day Mid-Autumn Festival holiday declined, with tourism revenue also declining, official data showed, as COVID-related restrictions discouraged people from travelling. Read more

Both contracts rose more than $1.50 a barrel earlier in the session, supported by concerns over tighter stocks.

“The structural outlook for the oil market remains tight, but for now this is being offset by cyclical demand headwinds,” Morgan Stanley said in a note.

The United States’ Strategic Petroleum Reserve (SPR) fell 8.4 million barrels to 434.1 million barrels last week, the lowest since October 1984, government data showed Monday. Read more

The United States could start filling the SPR when crude prices fall below $80 a barrel, a Bloomberg reporter said on Twitter.

U.S. commercial oil inventories are expected to have risen by 800,000 barrels last week, analysts said in a Reuters poll.

Weekly industry inventory data from the American Petroleum Institute (API) is due at 4:30 p.m. EDT (2030 GMT), followed by the government report at 10:30 a.m. EDT on Wednesday.

“We remain constructive on oil prices despite intensifying demand headwinds as supply remains supportive with slower-than-expected U.S. production growth and proactive OPEC+,” wrote energy analyst Amarpreet Singh. at Barclays, in a note.

Prospects for a relaunch of the nuclear deal between the West and Iran remained dim. Germany on Monday regretted Tehran’s failure to respond positively to European proposals to revive the 2015 deal. US Secretary of State Antony Blinken said a deal would be unlikely in the short term. Read more

The Organization of the Petroleum Exporting Countries on Tuesday maintained its forecast for robust growth in global oil demand in 2022 and 2023, citing signs that major economies are doing better than expected despite headwinds such as surging global warming. ‘inflation. Read more

Join now for FREE unlimited access to Reuters.com

Additional reporting by Ahmad Ghaddar in London, Isabel Kua in Singapore; Editing by Marguerita Choy and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

Previous Maryland Department of Agriculture Accepting Proposals for 2023 Animal Waste Technology Fund - Southern Maryland News Net
Next Growth in the CPA liability insurance market continues; Key Players Studied – InsuranceNewsNet