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Oil futures drifted slightly lower early Thursday as the U.S. dollar continued to strengthen and investors remained jittery about the demand outlook as the Federal Reserve prepares to deliver what’s expected to be another jumbo interest rate hike next week.
Price action
-
West Texas Intermediate crude for October delivery
CL.1,
-1.72% CLV22,
-1.72%
fell 44 cents, or 0.5%, to $88.04 a barrel on the New York Mercantile Exchange. -
November Brent crude
BRN00,
-1.71% BRNX22,
-1.71% ,
the global benchmark, was down 49 cents, or 0.5%, at $93.61 a barrel on ICE Futures Europe. -
Back on Nymex, October gasoline
RBV22,
-2.91%
fell 1.3% to $2.4919 a gallon, while October heating oil
HOV22,
-3.65%
shed 2.2% to $3.3029 a gallon. -
October natural gas
NGV22,
-6.42%
slumped 4.4% to $8.713 per million British thermal units.
Market drivers
Analysts said expectations for the Federal Reserve to raise the fed-funds rate by at least 75 basis points, or 0.75 percentage point, when policy makers meet next week continues to loom over the oil market, stoking fears of an economic downturn as central bankers attempt to rein in stubborn inflation.
“The price of oil has reached our near-term objective of $81-$82 dollars after a technical breakdown pushed prices lower. However, in the short-term we maintain our cautious stance as we see the global economy being weighed down by climbing interest rates, thus cutting into demand,” said Peter Cardillo, chief market economist at Spartan Capital Securities, in a note.
“On the other hand, we think prices are likely to remain within a $10 trading range between the $82 – $92 area over the next quarter,” he wrote.
Expectations for an aggressive move by the Fed has lifted the greenback, with the ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, trading near a 20-year high seen last week.
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