Oil drops more than 1% amid rising dollar, demand concerns

Oil prices fell more than 1% on Monday, weighed by expectations of sluggish global demand and a stronger dollar ahead of a possible significant interest rate hike. However, supply worries are limiting the price slide.

The world’s central banks will almost certainly raise interest rates this week, and the Federal Reserve may raise interest rates by a percentage point.

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

The British public holiday due to Queen Elizabeth’s funeral is expected to limit activities.

Oil prices rose sharply in 2022, with Brent crude approaching an all-time high of $147 in March after concerns about supplies were exacerbated by Russia’s invasion of Ukraine. However, prices fell after that amid fears of weak economic growth.

The dollar settled close to a 20-year high before the decisions expected this week by the Federal Reserve and other central banks. The dollar’s rise caused a rise in the prices of commodities denominated for dealers in other currencies and cast a shadow on oil and other risk-sensitive commodities.

Oil also faced pressure due to expectations of lower demand, such as the International Energy Agency forecast last week to record zero demand growth in the fourth quarter.

However, supply concerns kept falling prices in check.