Oil prices fall 1% on US recession fears

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Oil prices fell on Tuesday (20), following the fall of other risk assets, in the face of a strong dollar and investors anticipating further increases in interest rates from the US central bank (Fed), intended to contain the inflation.

Brent futures fell $1.38, or 1.5%, to settle at $90.62 a barrel, while October WTI crude ended at $84.45, down $1.28 on the its due date. The most active November contract fell $1.42 to settle at $83.94 a barrel.

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Both Brent and WTI are on course for their biggest quarterly declines in percentage terms since the start of the Covid-19 pandemic. Brent hit about $139 a barrel in March, its highest since 2008.

The US Federal Reserve is expected to raise interest rates by a further 75 basis points on Wednesday to rein in inflation. Those expectations are weighing on equities, which often move in tandem with oil prices. Other central banks, including Britain’s, also meet this week.

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The higher rates boosted the dollar, which remained near a two-decade high against peers on Tuesday, making oil more expensive for holders of other currencies.

“The oil market is caught between bearish concerns and bullish hopes. The concerns are driven by aggressive monetary tightening in the US and Europe, which is increasing the likelihood of a recession and could weigh on oil demand prospects,” said Giovanni Staunovo, commodities analyst at UBS.

Source: CNN Brasil

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