Oil Price Decrease Due To Interest Rate Increase, Russian Export

Oil prices continued to decline on Tuesday as the prospect of future interest rate increases and the influx of Russian crude offset expectations for a revival in demand in China.

By 04:15 GMT, March Brent oil futures LCOc1 were down 5 cents to $84.85 per barrel, while the more actively traded April contracts were down 32 cents or 0.38% to $84.18 per barrel.

American West Texas Intermediate (WTI) crude CLc1 futures fell 33 cents, or 0.42%, to $77.57 per barrel.

"Oil markets are facing downside pressure as risk-off trades prevail ahead of the Fed meeting, along with a strengthened USD," said CMC Markets analyst Tina Teng.

Despite China's reopening, the prognosis for demand is still unknown because Russia's shipments appear to be unaffected by the sanctions.

Investors anticipate that the U.S. Federal Reserve will hike interest rates by 25 basis points on Wednesday, followed the next day by increases of 50 basis points by the Bank of England and the European Central Bank. Higher rates might reduce oil demand and slow down the world economy.

The market also focused on an OPEC+ (Organization of the Petroleum Exporting Countries plus Others) ministerial meeting that is scheduled to take place virtually on February 1 at 1100 GMT.

When OPEC+ meets this week, the panel is anticipated to suggest maintaining the group's present output guideline, five OPEC+ delegates told Reuters on Monday.

Despite a European Union boycott and a G7 price restriction imposed after its invasion of Ukraine, which pushed up prices, Russia continues to supply the global market with its oil.

Increases in China's official purchasing managers' index (PMI) figures, which indicate possibly strong future demand, helped to cushion declines as the nation's non-manufacturing sector entered the expansion zone for the first time since September 2022.

The "surprisingly resilient" demand in the United States and Europe, a decline in energy prices, and the reopening of China's economy after Beijing dropped its harsh COVID-19 regulations have all led to a tiny increase in the International Monetary Fund's (IMF) projection for global growth in 2023.