Oil futures slip 1% on worries about more US interest rate hikes
Oil prices slid about 1% on Monday as strong US economic data had investors bracing for more interest rate hikes from the US Federal Reserve to fight inflation which could also cut oil demand.
Losses were limited by oil supply concerns after Russia halted exports to Poland via a key pipeline.
Brent futures fell 56 cents, or 0.7%, to $82.60 a barrel by 11:18 a.m. EST (1618 GMT). US West Texas Intermediate (WTI) crude fell 44 cents, or 0.6%, to $75.88.
New orders for key US-manufactured capital goods increased more than expected in January while shipments rebounded, suggesting that business spending on equipment picked up at the start of the first quarter.
That positive economic data helped global stock markets to rebound, yet shares remained near six-week lows as investors braced for interest rate hikes in the United States and Europe.
Fed Governor Philip Jefferson said inflation for services in the United States remains “stubbornly high.”
Adding to global oil demand worries, rising Sino-US tensions hammered equity markets in China and Hong Kong while investors awaited policy signals from the upcoming National People's Congress.
On Sunday, White House National Security Adviser Jake Sullivan said China has not moved toward providing Russia with lethal aid for use against Ukraine and added Washington has made clear behind closed doors that such a move would have serious consequences.
Russia halted supplies of oil to Poland via the Druzhba pipeline, Polish refiner PKN Orlen said on Saturday, a day after Poland said it had delivered its first Leopard tanks to Ukraine.
On Monday, Russian oil pipeline monopoly Transneft said it started pumping oil from Kazakhstan to Germany via Poland through the Druzhba pipeline, while halting deliveries to Poland.
Russia announced plans this month to cut oil exports from its western ports by up to 25% in March versus February, exceeding its previously mooted production cuts of 5%.
Still, most analysts see a European Union (EU) ban on Russian seaborne oil imports and an international price cap having only a small impact on overall global supply.
“Russian oil output has exceeded expectations in recent months due to lax EU/US sanctions,” Bank of America said in a note.
(Source: Reuters)
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