Investing.com-- Oil prices fell slightly in Asian trade on Tuesday amid growing fears that higher-for-longer U.S. interest rates will weigh on demand, while renewed concerns over China’s economy also dented sentiment.
Strength in the dollar put a damper on oil prices, as hawkish signals from the Federal Reserve saw the greenback scale a 10-month peak, pushing up crude costs for international buyers.
Markets also grew increasingly wary of more increases in U.S. rates, which are expected to weigh on economic activity this year and potentially hurt crude demand. The Fed had recently warned that higher energy costs, in the wake of surging oil prices, will likely buoy inflation and further the need for higher rates.
In addition to Fed-related headwinds, oil markets were also grappling with renewed fears of an economic slowdown in China, the world’s largest oil importer, as analysts soured further on its growth prospects this year.
The negative trends saw traders question whether oil prices had the capacity for more gains, especially after they surged to 10-month highs earlier in September.
Brent oil futures fell slightly to $91.69 a barrel, while West Texas Intermediate crude futures fell 0.1% to $89.58 a barrel by 21:04 ET (01:04 GMT).
A string of major brokerages and investment banks- most recently S&P Global and HSBC- downgraded their outlook for Chinese economic growth this year, with analysts warning that gross domestic product could only grow 4.8% in 2023- lower than the government’s 5% forecast.
The downgrades come just a few days before key Chinese purchasing managers’ index (PMI) data for September, which is expected to show continued weakness in business activity.
While PMI readings for August had shown some
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