Oil prices are stabilizing on fears of the Fed and the oil profits tax

An aerial view shows an oil plant of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken November 12, 2021. Mandatory Credit Kyodo/via REUTERS

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June 14 (Reuters) – Oil prices stabilized lower on Tuesday on fears the U.S. Federal Reserve could surprise markets with a bigger-than-expected interest rate hike.

Most Fed watchers expected the US central bank to hike rates 50 basis points at its meeting on Wednesday. But after Friday’s surprisingly strong consumer price index (CPI) data for May, more are expecting a 75 basis point rate hike. Read more

Brent crude futures settled down $1.10, or 0.9%, at $121.17 a barrel. U.S. West Texas Intermediate (WTI) crude fell $2, or 0.7%, to settle at $118.93 a barrel

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“This fear of an even bigger rise in basis points is driving stocks and oil down,” said John Kilduff, a partner at Again Capital LLC in New York.

Oil prices came under pressure following reports that US Senate Finance Committee Chairman Ron Wyden was considering introducing legislation setting a 21% surtax on oil companies’ profits, seen as excessive , an aide told Reuters. Read more

The bill would apply an additional 21% tax on the excess profits of oil and gas companies with more than $1 billion in annual revenue, the aide said.

The tight supply was aggravated by a drop in exports from Libya amid a political crisis that hit production and ports.

Other OPEC+ producers are struggling to meet production quotas and Russia is facing bans on its oil because of the war in Ukraine.

The US Department of Energy (DOE) also announced the fourth notice of sale of 45 million barrels of crude oil from the Strategic Petroleum Reserve.

UBS raised its Brent price forecast to $130 a barrel for the end of September and to $125 for the next three quarters, from $115 previously.

“Low oil inventories, dwindling spare capacity and the risk that supply growth will lag demand growth over the coming months have prompted us to raise our oil price forecast,” he said. said the bank.

Rating agency Fitch raised its Brent and WTI price assumptions for 2022 by $5 to $105 and $100 a barrel, respectively.

The market was waiting for weekly reports from the American Petroleum Institute on Tuesday and the US Energy Information Administration on Wednesday for US crude and fuel inventory data.

Six analysts polled by Reuters forecast U.S. crude inventories fell 1.2 million barrels last week, while gasoline inventories rose 800,000 barrels and distillate inventories, which include diesel and fuel oil, remained unchanged.

On the demand side, China’s latest COVID outbreak, linked to a Beijing bar, has raised fears of a new phase of lockdown. Read more

In its monthly report, the Organization of the Petroleum Exporting Countries maintained its forecast that global oil demand will exceed pre-pandemic levels in 2022, but said Russia’s invasion of Ukraine and developments related to the coronavirus pandemic pose a considerable risk. Read more

The group sees demand growth slowing next year, OPEC delegates and industry sources told Reuters, as soaring oil prices help drive up inflation and curb the economy. ‘Mondial economy. Read more

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Additional reporting by Ahmad Ghaddar in London, Sonali Paul and Isabel Kua in Singapore; edited by David Gregorio, Jason Neely, Louise Heavens, Marguerita Choy and Deepa Babington

Our standards: The Thomson Reuters Trust Principles.

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