Oil falls as rate hikes slow, Russian flows remain strong

  • The US Fed, ECB and BoE all saw rates rise this week
  • OPEC+ marriage panel meeting unlikely to change policy
  • Oil rose earlier after Iran drone attack

LONDON, Jan 30 (Reuters) – Oil fell on Monday, giving up earlier gains, as impending interest rate hikes by major central banks and signs of strong Russian exports offset rising tensions in the Middle East. following a drone attack in Iran and hopes for higher Chinese demand. .

Investors expect the Federal Reserve to hike rates by 25 basis points on Wednesday, followed the next day by half-point hikes from the Bank of England and the European Central Bank, and all deviation from this scenario would be a shock.

Brent crude fell 29 cents, or 0.3%, to $86.37 a barrel at 0910 GMT while US West Texas Intermediate crude fell 52 cents, or 0.7%, to $79.16 .

Oil prices “are likely to be weighed down by potential interest rate hikes at the next Fed meeting,” Serena Huang, head of APAC analysis at Vortexa, said in an email.

The market was also under pressure due to indications of strong Russian supply, despite an EU ban and a price cap imposed by the G7 following its invasion of Ukraine. Last week, both oil benchmarks suffered their first weekly loss in three.

In addition to central bank meetings, a gathering on Wednesday of top ministers from the Russia-led Organization of Petroleum and Allied Exporting Countries, known as OPEC+, will also be the focus.

Wednesday’s OPEC+ panel meeting is unlikely to change oil production policy – although broker PVM said it could surprise with a small cut.

β€œThe next wave of price catalysts sets the stage for significant swings in oil prices this week,” said Stephen Brennock of PVM. “That said, prices are unlikely to fall below $80 and will struggle to get closer to $100.”

Oil rose earlier on Monday amid tensions in the Middle East following a drone attack on the Iranian oil producer.

Although it is not yet clear what is happening in Iran, any escalation there could disrupt the flow of crude, said Stefano Grasso, senior portfolio manager at 8VantEdge in Singapore.

Hopes of rising demand from China have boosted oil in 2023. The world’s biggest crude importer pledged over the weekend to foster a recovery in consumption that would support demand.

Additional reporting by Florence Tan and Emily Chow; Editing by Louise Heavens

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