Oil Falls as The Dollar Rises on Bets That The Fed Will Raise Interest Rates

Oil prices fell on Friday, erasing gains made in the previous session, as the dollar continued to rise on bets that the US central bank would present plans to raise interest rates to curb inflation.

In Asian trading, US West Texas Intermediate crude futures fell 26 cents, or 0.3%, to $ 81.33 a barrel, after a gain of 25 cents on Thursday.

Brent crude futures fell 25 cents, or 0.3%, to $82.62 a barrel, erasing yesterday’s gains.

The two contracts are heading towards ending the week almost unchanged after sharp moves up and down driven by the rise of the dollar and speculation about whether the administration of US President Joe Biden will release oil from the Strategic Petroleum Reserve to calm prices.

There are positive signs regarding demand as the air travel recovery accelerates, but monetary and fiscal policy tightening and the upcoming Northern Hemisphere winter will be disincentives.

It is noteworthy that the Organization of Petroleum Exporting Countries (OPEC) has lowered its forecast for oil demand in the fourth quarter by 330,000 barrels per day from last month’s forecast, as high energy prices curb the recovery from the Covid-19 pandemic.