Oil falls more than 1% on demand fears, strong dollar

Crude oil storage tanks are seen in an aerial photo at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base

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  • Strong dollar weighs as Fed rate decision nears
  • The offer applies to border falls
  • Easing the COVID-19 restrictions in China could provide support

LONDON, Sept 19 (Reuters) – Oil fell more than 1% on Monday, pressured by expectations of weaker global demand and by a stronger U.S. dollar ahead of a possible big rate hike, although supply concerns capped declines.

Central banks around the world are certain to raise borrowing costs this week, and there is some risk of a 1 percentage point increase from the US Federal Reserve.

“The upcoming Fed meeting and the strong dollar are keeping a lid on prices,” said Tamas Varga at oil broker PVM.

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Brent crude for November delivery fell $1.17, or 1.3%, to $90.18 by 0822 GMT. US West Texas Intermediate (WTI) for October fell $1.14, or 1.3%, to $83.97.

A British public holiday for the funeral of Queen Elizabeth was expected to limit activity. read more

Oil has soared in 2022, with Brent approaching its all-time high of $147 in March after Russia’s invasion of Ukraine exacerbated supply concerns. Concerns about weaker economic growth and demand have since pushed prices down.

The US dollar held near two-decade highs ahead of this week’s decisions by the Fed and other central banks. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies and tends to weigh on oil and other risk assets.

Oil has also come under pressure from forecasts of weaker demand, such as last week’s prediction from the International Energy Agency that the fourth quarter will see zero demand growth. read more

Despite these concerns, supply concerns kept the decline at bay.

“The market still has the start of European sanctions on Russian oil hanging over it. With supply being disrupted in early December, the market is unlikely to see any quick response from US producers,” ANZ analysts said.

Easing of COVID-19 restrictions in China, which had dampened the outlook for demand in the world’s second-largest energy consumer, could also provide some optimism, the analysts said. read more

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Additional reporting by Florence Tan and Jeslyn Lerh; Editing by Robert Birsel

Our standards: Thomson Reuters Trust Principles.

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