Oil falls more than 1% on demand fears, strong dollar

Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone BaseRegister now for FREE unlimited access to Reuters.comRegisterStrong dollar weighs as Fed rate decision loomsSupply concerns limit declineEasing COVID-19 restrictions in China could lend supportLONDON, Sept 19 (Reuters) – Oil fell by more than 1% on Monday, pressured by expectations of weaker global demand and by U.S. dollar strength ahead of a possible large interest rate increase, though supply worries limited the decline.Central banks around the world are certain to increase borrowing costs this week, and there is some risk of a blowout 1 percentage point rise by the U.S. Federal Reserve.”The upcoming Fed meeting and the strong dollar are keeping a lid on prices,” said Tamas Varga of oil broker PVM.Register now for FREE unlimited access to Reuters.comRegisterBrent crude for November delivery fell $1.17, or 1.3%, to $90.18 by 0822 GMT. U.S. West Texas Intermediate (WTI) for October dropped $1.14, or 1.3%, to $83.97.A British public holiday for the funeral of Queen Elizabeth was expected to limit activity. read more Oil has soared in 2022, with Brent coming close to its all-time high of $147 in March after Russia’s invasion of Ukraine exacerbated supply concerns. Worries about weaker economic growth and demand have since pushed prices lower.The U.S. dollar stayed near a two-decade high ahead of this week’s decisions by the Fed and other central banks. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies and tends to weigh on oil and other risk assets.Oil has also come under pressure from forecasts of weaker demand, such as last week’s prediction from the International Energy Agency that the fourth quarter would see zero demand growth. read more Despite those worries, supply concerns kept the decline in check.”The market still has the start of European sanctions on Russian oil hanging over it. As supply is disrupted in early December, the market is unlikely to see any quick response from U.S. producers,” ANZ analysts said.Easing COVID-19 restrictions in China, which had dampened the outlook for demand in the world’s second biggest energy consumer, could also provide some optimism, the analysts said. read more Register now for FREE unlimited access to Reuters.comRegisterAdditional reporting by Florence Tan and Jeslyn Lerh; Editing by Robert BirselOur Standards: The Thomson Reuters Trust Principles.

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