Oil falls by more than 3% due to US rail deal, demand worries

General view of oil tanks and Phillips 66’s Bayway refinery on March 30, 2020 in Linden, New Jersey, US. Reuters/Mike Seger

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NEW YORK, Sept 15 (Reuters) – Oil futures fell more than 3% to a one-week low on Thursday in a tentative agreement, buoyed by a US rail strike, weak global demand expectations and the strength of the US dollar ahead of a potentially big deal. Will continue increase in interest rate.

Brent futures fell $3.26, or 3.5%, to $90.84 a barrel, while US West Texas Intermediate (WTI) crude was down $3.38, or 3.8%, at $85.10, the lowest for both benchmarks since Sept. is closed.

Major US railroads and unions secured a tentative deal after 20 hours of intense negotiations by President Joe Biden’s administration to stop a rail shutdown affecting food and fuel supplies across the country and beyond. read more

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The prospect of a strike on Wednesday gave some support to the market.

That rail deal helped US diesel and gasoline futures drop more than 5% during the session.

Analysts at energy consulting firm Ritterbush & Associates said the oil complex is “strengthening the US dollar and drafting back on a tentative agreement that would halt the US railroad workers’ strike.” Crack spreads were weak.

The US 3:2:1 crack spread – a measure of refining profit margins – was on track for its lowest level since early March.

Downside risks continue to weigh on the global economic outlook and some countries are expected to hit a recession in 2023, but according to the International Monetary Fund (IMF), it is too early to say whether there will be a broader global recession. read more

World Bank chief economist Indermit Gill said he was concerned about a “generalized stagflation” in the global economy, a period of low growth and high inflation, noting that the bank beat forecasts for three-quarters of all countries. Had given. read more

The Wall Street index (.SPX), (.IXIC) were in the red, while the dollar (.DXY) was near a 20-year high it hit on Sept. 6, as a slew of economic data showed signs of resilience in the US economy. that could keep the Federal Reserve on track for aggressive interest rate hikes. [nL4N30M33J] read more

A stronger dollar reduces demand for oil by making the fuel more expensive for buyers using other currencies.

“Oil fundamentals are still mostly bearish as China’s demand outlook remains a big question mark and the Fed-fighting inflation is set to weaken the US economy,” said Edward Moya, senior market analyst at data and analytics firm OANDA. is ready.”

The International Energy Agency (IEA) said this week that oil demand growth would stall in the fourth quarter.

Crude oil prices fell sharply in March following Russia’s invasion of Ukraine, raising supply concerns, under pressure from recession prospects and weak demand.

Other factors impacting oil prices include an increase in US crude inventories and an expected reduction in energy use by the Ethereum blockchain. [EIA/S] read more

Meanwhile, the EU executive plans to raise more than 140 billion euros ($140 billion) to protect consumers from rising energy prices by reducing revenue from low-cost power generators and sharing windfall profits to fossil fuel firms. has created. read more

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Reporting by Scott DiSavino in New York Additional reporting by Alex Lawler in London and Muyu Xu in Singapore Editing by Marguerita Choy and Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.

Scott DiSavino

Thomson Reuters

Covers the North American electricity and natural gas markets.

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