Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Oil falls to settle at 3-week low as Fed policy stance lifts dollar

Published 10/31/2023, 08:48 PM
Updated 11/01/2023, 03:31 PM
© Reuters. An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken on November 12, 2021.  Mandatory credit Kyodo/via REUTERS/File Photo

By Scott DiSavino

NEW YORK (Reuters) - Oil prices eased about 1% to a three-week low on a rising U.S. dollar and after the U.S. Federal Reserve kept interest rates steady as expected but noted it would keep the door open to possible future rate hikes due to a strong U.S. economy.

Interest rate hikes can slow economic growth and dampen oil demand. A strong dollar makes it more expensive to buy fuel using other currencies, pressuring prices.

Brent futures fell 39 cents, or 0.5%, to settle at $84.63 a barrel. U.S. West Texas Intermediate (WTI) crude fell 58 cents, or 0.7%, to $80.44.

That was the lowest settlement for Brent since Oct. 6 and WTI since Aug. 28. Both contracts settled below their 100-day moving averages, a key level of technical support since July.

Trade was choppy, with both benchmarks up over $2 a barrel early on Middle East worries.

The Fed, which started raising interest rates in March 2022, held rates steady but left the door open to a further increase due to a strong U.S. economy.

The U.S. dollar rose to a four-week high against a basket of other currencies. Crude futures were also pressured by an increase in U.S. crude stocks and gasoline inventories last week as refiners undergoing seasonal maintenance restarted units more slowly than expected to avoid even larger gasoline stock builds.

In Europe, October inflation in the Euro zone was at its lowest in two years, a Eurostat flash reading showed, stoking the view the European Central Bank is unlikely to hike interest rates soon. The Bank of England is expected to meet on Thursday.

In China, the world's largest oil importer, factory activity unexpectedly contracted in October, a private survey showed, adding to downbeat official figures from a day earlier.


"The oil market will remain fixated with the deteriorating demand outlook and if any of the latest developments with the Israel-Hamas war will lead to any supply disruptions," Moya at OANDA said.

In Gaza, a first group of injured people were evacuated to Egypt, a source and Egyptian media said, as Israeli forces pressed their battle against Hamas militants.

Iran's Supreme Leader Ayatollah Ali Khamenei called on Muslim states to cease oil and food exports to Israel, demanding an end to its bombardment of the Gaza Strip, state media reported.

© Reuters. An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken on November 12, 2021.  Mandatory credit Kyodo/via REUTERS/File Photo

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), produced around 2.5 million barrels per day of crude in 2022, according to U.S. energy data.

Callum Macpherson, head of commodities at Investec, said that if there is no threat to output from the war, "oil may struggle to sustain prices around recent highs without support from OPEC+ into 2024, making their meeting later this month crucial."

Latest comments

Buy before go to moon
prefer buying gold to oil
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.