Oil prices are still falling as investors await further rate hikes today and tomorrow, after falling nearly five percent on Tuesday to a five-week low on growing economic concerns over rising US defaults.
The Federal Reserve is expected to raise rates by 25 basis points on Wednesday to curb inflation. The European Central Bank is also expected to raise rates at its meeting on Thursday.
Further rate hikes could slow economic growth and undermine energy demand.
In addition, fears of a US default have risen. The White House said President Joe Biden would not negotiate the debt ceiling at his meeting with four senior congressional leaders on May 9, but would discuss starting a “separate budget process.”
Brent crude futures fell 13 cents, or 0.2 percent, to $75.19 a barrel, while West Texas Intermediate crude fell 13 cents, or 0.2 percent, to $71.53, according to Reuters.
Both benchmarks closed at their lowest levels since March 24 on Tuesday, also posting their biggest one-day percentage drop since early January.
Energy prices are also under pressure after Chinese data over the weekend showed an unexpected decline in manufacturing activity in April. China is the world’s largest energy consumer and biggest buyer of crude oil.
Meanwhile, OPEC’s oil production plummeted last month, with Iraq’s exports falling due to a pipeline shutdown and a labor strike in Nigeria that halted its exports.
Reuters quoted a source in the Iraqi Oil Marketing Company (SOMO) as saying that Iraq produced 3.938 million barrels per day of crude oil in April, down 262,000 barrels per day compared to March.
This level means that Iraq produced about 500,000 barrels per day less than its April quota under the agreement with the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and other allies.
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