Oil down on sturdy greenback, recession worries and hawkish Fed speak By Reuters

By David Gaffen

NEW YORK (Reuters) -Oil futures fell for a 3rd day in a row on Wednesday, fueled by ongoing issues about demand, the greenback’s power and expectations for extra rate of interest hikes by main central banks.

Each OPEC and the U.S. Vitality Division slashed their demand outlooks. Final week, along with allies together with Russia, OPEC despatched costs rising when it agreed to chop provide by 2 million barrels per day (bpd).

futures settled down $1.84, or 2%, to $92.45. U.S. West Texas Intermediate crude ended down $2.08, a 2.3% drop, to $87.27 a barrel.

OPEC on Wednesday lower its outlook for demand progress this yr by between 460,000 bpd and a pair of.64 million bpd, citing the resurgence of China’s COVID-19 containment measures and excessive inflation.

“The world financial system has entered right into a time of heightened uncertainty and rising challenges,” OPEC mentioned in its month-to-month report.

The U.S. Vitality Division lowered its expectations for each manufacturing and demand in the US and globally. It now sees only a 0.9% improve in U.S. consumption in 2023, down from a earlier forecast for an increase of 1.7%. Worldwide, the division sees consumption rising simply 1.5%, down from a earlier forecast for two% progress.

“We’re not buying and selling a slowdown within the financial system – it is worry of a slowdown sooner or later,” mentioned Phil Flynn, analyst at Value Futures Group in Chicago.

The power market is underneath strain as nicely from the greenback, which rallied towards low-yielding currencies just like the yen. The Federal Reserve’s dedication to maintain elevating rates of interest to stem excessive inflation has boosted yields, making the U.S. foreign money extra enticing to international buyers.

Minneapolis Fed President Neel Kashkari mentioned on Wednesday the central financial institution will keep on with its present course as “now we have not but seen a lot proof that underlying inflation … is but softening.”

U.S. producer-level inflation fanned worries on Wednesday as wholesale costs rose greater than anticipated. A stronger greenback makes dollar-denominated commodities costlier for holders of different currencies and tends to weigh on oil and different danger belongings.

OPEC’s choice angered the US, with President Joe Biden vowing unspecified “penalties” for relations with Saudi Arabia after the transfer resulting from present tightness in provide worldwide.

Russia’s state-owned pipeline monopoly Transneft on Wednesday mentioned it had obtained discover from Polish operator PERN a couple of leak on the Druzhba oil pipeline, Interfax reported.

The Worldwide Financial Fund on Tuesday lower its world progress forecast for 2023 and warned of accelerating danger of a world recession.