Oil prices have fallen in recent days and continued their decline on Tuesday, amid concerns that more aggressive U.S. interest rate hikes will hurt demand.

In this article, we will discuss why oil prices are falling and what is affecting the oil market.
 
Oil Price Drop
 
Brent crude futures fell 91 cents, or 1.1%, to settle at $82.38 a barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped $1.11, or 1.4%, to settle at $76.47 a barrel. Both oil grades fell more than 3% on Tuesday.
 
Comments by U.S. Federal Reserve Chairman Jerome Powell about higher and longer-than-expected interest rate hikes have stoked fears in markets and sent risk assets, including commodities, sharply lower overnight. The comments have affected the oil market and caused prices to fall.



 
Impact of Powell's Comments on Oil Markets
 
Powell's comments about higher and longer-than-expected interest rates have raised concerns in the market. This is because tighter monetary policy will suppress oil demand and could pose a risk of deflation. This risk could affect the oil market and cause prices to fall.
 
In addition, a stronger US dollar also capped oil prices. Powell's comments have pushed the US dollar to a three-month high against major currencies. This has also caused oil prices, which usually trade inversely to the US dollar, to fall.
 
Barclays Analysis of Oil Market
 
Barclays lowered its 2023 Brent forecast by $6 to $92 a barrel and WTI by $7 to $87 a barrel, citing higher-than-expected Russian oil supplies.
 
Barclays expects a continued recovery in civil aviation demand in China and neighboring countries, stabilization in industrial activity and slower non-OPEC+ supply growth to push the oil market balance into deficit later this year.
 
Conclusion

Oil prices have fallen over the past few days due to concerns about more aggressive US interest rate hikes and Jerome Powell's comments on tighter monetary policy. This has affected the oil market and caused prices to fall.
 
However, Barclays is optimistic that the oil market will rebalance by the end of this year due to continued recovery in demand and slower supply.

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