Oil prices decreased on Tuesday amid the rising value of the US dollar against other currencies and uncertainties over the timing of the US Federal Reserve’s (Fed) interest rate cut while ongoing Israeli attacks on Gaza City in the Middle East limit price decline.
International benchmark Brent crude traded at $84.90 per barrel at 11.52 a.m. local time (0852 GMT), a decrease of 0.29% from the closing price of $85.15 per barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $81.43 per barrel at the same time, a 0.25% fall from the previous session that closed at $81.63 per barrel.
Strong US dollar against other currencies, dulled oil demand and supported price declines. Strong dollar is expected to further reduce demand by making oil more expensive for foreign currency users.
Ongoing uncertainties over the timing of the Fed interest rate cut continue to influence prices by raising demand concerns.
The probability of the Fed’s first rate cut in September is 74% and 90% for November. The possibility of the bank cutting interest rates for the second time in December is 90%.
Analysts expect growth and personal consumption data in the US, due later in the week, to give clues about the steps that the bank will take in the coming period.
High interest rates for longer could reduce oil demand and in turn lower prices further while low interest rates reduce the value of the US dollar relative to other currencies.
Meanwhile, escalating geopolitical tensions in the Middle East, home to the vast majority of global oil reserves, fueled market players’ concerns about the possibility of a disruption in global energy supply routes and limited price declines.
The head of the Hamas group, Ismail Haniyeh, lost several family members, including his sister, over the course of an overnight airstrike on their home in western Gaza City on Tuesday.
According to a statement, the Israeli army claimed responsibility for the attack on two buildings in the Beach refugee camp and the Al-Daraj neighborhood, alleging they were used by the Hamas group.
