Crude oil futures fell on Tuesday morning as investors worried about inflation in major economies and moves by central banks to control it.
October Brent oil futures were at $104.10, down by 0.91%, at 10.30 a.m. on Tuesday, and October WTI crude oil futures were at $96.40, down by 0.68%.
“The expectation that the Federal Reserve will continue to raise interest rates has dampened risk appetite. A drop in natural gas prices in Europe adds to the uncertainty surrounding the energy crisis “, according to analysts at Hong Kong-based Haitong Futures.
The sombre mood is a result of comments made by Fed Chairman Jerome Powell on Friday, who stated that central banks are likely to continue raising interest rates in order to control inflation.
September crude oil futures were trading at ₹7,728 on the Multi Commodity Exchange (MCX) in the early trading hour of Tuesday morning, down by 0.12% from the previous close of ₹7,737, and October futures were trading at 7,678 against the previous close of ₹7,682, down by 0.05%.
High inflation is a concern in some countries, and many are resorting to measures such as interest rate hikes to control inflation, causing the economy to slow. This, in turn, reduces the consumption of major commodities such as crude oil.
Market participants anticipate that the US and some European countries will raise interest rates further to control inflation.
As the price of crude oil falls globally, some OPEC (Organization of the Petroleum Exporting Countries) members and their allies, also known as OPEC+, are planning to reduce production to halt the decline in global crude oil prices.
Market participants are anticipating clarity from the OPEC+ meeting on September 5.