By Adedapo Adesanya
The prices of crude oil went down on Tuesday, with the Brent falling by 83 cents or 0.9 per cent to sell at $93.17 a barrel and the US West Texas Intermediate (WTI) declining by 47 cents or 0.5 per cent to $87.31 per barrel.
One of the major factors for the slide was the unexpected rise in consumer prices in the United States by 0.1 per cent in August 2022 amid rising costs for rents and healthcare, giving the Federal Reserve another reason to deliver a third 75 basis points interest rate hike next Wednesday.
The surprisingly firm inflation readings reported by the US Labor Department on Tuesday were despite the ease in global supply chains, which had contributed to a surge in prices earlier in the year.
The consumer price index edged up 0.1 per cent to 8.3 per cent last month after being unchanged in July. Though consumers got some relief from a 10.6 per cent decline in fuel prices, they had to dig deeper to pay for food, rent, healthcare, electricity, and natural gas.
With the US Federal Reserve set to meet next Tuesday and Wednesday, with inflation way above the US central bank’s 2 per cent target, analysts say the Fed may have to raise rates quicker than expected which could cause a risk back off sentiment in crude and further strength to the Dollar.
Oil is generally priced in the US currency, so a stronger greenback makes the commodity more expensive to holders of other currencies.
Renewed COVID-19 curbs in China, the world’s second-largest oil consumer, also weighed on crude prices.
The number of trips taken over China’s three-day Mid-Autumn Festival holiday shrank, with tourism revenue also falling, official data showed, as COVID-linked restrictions discouraged people from travelling.
Meanwhile, the market is losing hope that more Iranian barrels will help tackle supply issues due to a joint statement issued by three European countries privy to nuclear talks with the Middle East producer.
The governments of France, Germany, and the UK criticized Iran for not seizing the opportunity presented by the EU draft deal and that there remain serious doubts about its intentions.
