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HOUSTON (Reuters) – Oil prices fell nearly $6 a barrel on Tuesday, the biggest drop in nearly a month, on fears of slumping fuel demand as global central banks raise interest rates to combat rising inflation and failed turmoil in Iraq. To reduce crude oil exports to the OPEC country.
Brent crude futures for October closed down $5.78, or 5.5%, at $99.31 a barrel after touching a session low of $97.55 a barrel.
The October contract expires on Wednesday and the most active contract for November was at $97.84, down 4.9%.
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US West Texas Intermediate crude fell $5.37, or 5.5%, to $91.64.
With inflation approaching double digits in many major economies, central banks may resort to sharper increases in interest rates, slowing economic growth and fueling demand. Read more
Estonian policy maker Madis Mueller said on Tuesday that the European Central Bank should include a 75 basis point interest rate hike among its options for its September policy meeting. Read more
Data showed that German inflation in August rose to its highest level in nearly 50 years. The Hungarian Central Bank raised the key interest rate (HUINT = ECI) by 100 basis points to 11.75%.
It also boosted bets on another significant rate hike by the Federal Reserve dollar. A strong dollar makes dollar-denominated oil more expensive for buyers in other currencies.
Prices fell after comments from the state-owned Iraqi oil marketing company SOMO that Iraq’s oil exports were not affected by the unrest, Giovanni Stonovo, an analyst at UBS, said. Read more
The worst clashes in Baghdad in years between rival Shiite groups continued for a second day before calming down when cleric Moqtada al-Sadr ordered his supporters to return home. Read more
SOMO said it may redirect more oil to Europe if needed. Read more
Prices felt more pressure when Gazprom Neft, Russia’s fastest-growing oil producer, came under even more pressure (SIBN.MM), said it plans to double oil production at the Zhagrin field in Western Siberia to more than 110,000 barrels per day. Read more
Investors will be watching the meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known collectively as OPEC+, on Sept. 5.
Saudi Arabia last week raised the possibility of OPEC+ production cuts, which sources said could coincide with an increase in supplies from Iran if it strikes a nuclear deal with the West.
In another potential supply boost, Venezuela’s oil minister said the country was ready to move forward in business with oil giant Chevron Corp. (CVX.N)He added that progress in re-launching operations depends on licenses from Washington. Read more
With most producers already operating at or above capacity, and increasing indications that the global economy may be slowing, an increasingly low supply is likely in the coming months, said Matt Wheeler, head of research at FOREX.com and City Index. .
US crude stocks rose, while fuel stocks fell in the last week, according to market sources citing American Petroleum Institute figures on Tuesday.
Crude stocks rose by 593,000 barrels for the week ending August 26, according to the data. A preliminary Reuters poll showed on Monday that US crude oil inventories are likely to have fallen in the week ending August 26.
The Energy Information Administration, the statistical arm of the US Department of Energy, will release its own figures at 10:30 a.m. (1430 GMT) on Wednesday.
US gasoline futures closed at $2.6944 a gallon on Tuesday, their lowest close since February 18, before the Russian invasion of Ukraine. Read more
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Additional reporting by Arathi Sumasekhar in Houston and Rowena Edwards in London; Additional reporting by Moyo Cho in Singapore. Editing by David Gregorio, Matthew Lewis and Mark Heinrich
Our criteria: Thomson Reuters Trust Principles.
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