By Adedapo Adesanya
Oil settled lower on Thursday for the third consecutive day on the prospect of a large rate hike in the United States later this month.
Brent depreciated by 47 cents or 0.5 per cent to $99.10 a barrel while the US West Texas Intermediate (WTI) crude lost 52 cents or 0.5 per cent to close at $95.78 a barrel.
The pressure on the oil market was previously building after a higher-than-expected US inflation data for June and crude inventories build both reported on Wednesday, weighed on market sentiment and prices on Thursday.
In the world’s largest oil producer, consumer prices for June 2022, over the last 12 months, the all items index jumped by 9.1 per cent – the fastest consumer price increase since November 1981.
The figure was above expectations and prompted intensified market speculation that the US Federal Reserve, which meets on July 26-27, could opt for another major rate hike to curb inflation after raising the key interest rate by 75 basis points in early June.
The rate hike in June resulted in market sell-offs as traders and speculators worried that the aggressive rate hikes would lead to a recession.
Analysts note that the US central bank could even decide on a supersized rate hike of 100 basis points, which would likely trigger a downward trend for the market, which is facing hurtled demand.
Oil prices have tumbled in the past two weeks on recession concerns despite a drop in crude and refined products exports from Russia amid Western sanctions and supply disruption in Libya.
Also pressuring prices were fresh worries out of China due to curbs in multiple Chinese cities to rein in new cases of a highly infectious COVID-19 subvariant.
On the supply side, spare capacity at the Organisation of the Petroleum Exporting Countries (OPEC) is running low, with most of the producers pumping at maximum capacity, and it is unclear how much extra the cartel’s largest producer, Saudi Arabia can bring into the market quickly.
US President, Mr Joe Biden, will on Friday fly to Saudi Arabia, where he will attend a summit of Gulf allies and call for them to pump more oil.
Modupe Gbadeyanka