Oil prices fell on Tuesday amid concerns that fuel demand will be crimped by major central banks holding interest rates higher for longer, even with supply expected to be tight.
Brent crude futures were down 38 cents at $92.91 a barrel at 0400 GMT, while U.S. West Texas Intermediate crude futures were trading 34 cents lower at $89.34.
“Fears of an economic recession may again dominate the oil market’s movement due to surging US bond yields following the Fed’s hawkish stance last week,” said Tina Teng, a market analyst at CMC Markets in Auckland.
The world’s top economic policymakers, the U.S. Federal Reserve and the European Central Bank, have over recent days reiterated their commitment to fight inflation, signalling tight policy may persist longer than previously anticipated.
Higher interest rates slow economic growth, which curbs oil demand. Separately on Monday, rating agency Moody’s said that a U.S. government shutdown would harm the country’s credit, a warning coming one month after Fitch downgraded the U.S. by one notch on the back of a debt ceiling crisis.
China’s property woes have also weighed on sentiment, CMC’s Teng added, with China Evergrande’s announcement on Monday evening that it had missed a bond coupon payment driving renewed investor pessimism on the sector.
