Investing.com– Oil prices fell in Asian trading on Monday, reversing course from last week’s gains amid fears of higher, longer U.S. interest rates and a stronger dollar weighed on the crude oil markets.
Crude prices remained seated on some gains from last week, with markets retaining some risk premium as the war between Israel and Hamas raged, while bets on a market tightening persisted.
But they were still trading well off the highs reached earlier in April, as a war between Israel and Iran failed to materialize, while weak U.S. economic data raised concerns about a slowdown demand.
expiring in June fell 1.1% to $88.53 per barrel, while it fell 1% to $82.98 per barrel as of 9:41 p.m. ET (01:41 GMT).
Fears over US rates increase due to persistent inflation and Fed expectations
Markets further downgraded their bets on an anticipated interest rate cut by the Federal Reserve after the data – the Fed’s preferred inflation gauge – came in higher than expected for the month of March.
Fears of a sustained rise in U.S. interest rates were factored into fears of weakening oil demand later this year, particularly as economic growth weakens. This idea was reinforced by weaker-than-expected US growth data last week.
The strength of , following inflation data, also put pressure on crude prices.
The focus now shifts squarely to the Federal Reserve meeting scheduled for later this week, where the central bank is expected to keep rates steady and issue hawkish signals on monetary policy.
Beyond the Fed, other economic indicators were also in focus this week for oil markets. Data from China’s top importer is expected later in the week and is expected to offer more insight into the country’s ongoing economic recovery.
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Geopolitical tensions and tight supply bets persist
The specter of geopolitical tensions and potential supply risks in oil markets persists.
Ukraine attacked more Russian oil refineries over the weekend, while also calling for more military aid from the United States amid deteriorating conditions on the front lines.
Attacks on Russian refineries factored into bets on tighter supplies, especially as Russia announced further production and export cuts earlier this year.
In the Middle East, Israel continued its offensive against Hamas in the Gaza Strip, with the conflict showing few signs of de-escalation.
