LONDON (Reuters) – Oil fell 3% on Tuesday, with Brent crude hitting its lowest level since June after U.S. consumer prices rose in November, offering further evidence that the Federal Reserve was unlikely to turn to interest rate cuts beginning of next year.
The CPI report added to earlier downward pressure stemming from concerns about oversupply and slowing demand, despite support from rising supply risks in the Middle East following an attack by the Iran-aligned Houthis on a tanker. .
Brent crude futures for February fell $2.30, or 3%, to $73.73 per barrel at 1458 GMT and traded at $73.56, the lowest level since June. West Texas Intermediate crude oil for January fell $2.39, or 3.4%, to $68.93.
“Sentiment remains negative,” he said Tamas Varga from the broker PVM. “There is no help coming from the demand side of the oil equation. The fundamental picture is bleak.”
Growth in global oil demand is expected to slow in 2024, with OPEC and the International Energy Agency divided over the extent, and a recent agreement by OPEC+ to limit supply has dampened the market. OPEC and IEA update their forecasts this week.
With US inflation numbers out of the way, investors now await the outcome of Wednesday's Federal Reserve meeting. The central bank is expected to keep rates unchanged.
Nathaniel Casey, investment strategist at wealth manager Evelyn Partners, said the inflation report was very much in line with expectations.
“But while inflation continues to slow toward the Federal Reserve's 2% target, progress toward this goal appears to be slowing,” he added.
Also in focus are talks at the COP28 climate summit, where negotiators await a new draft agreement after many countries criticized a previous version as too weak because it omitted a “phase out” of fossil fuels.
And the latest US inventory reports are in sight, which are expected to show a 1.5 million barrel drop in crude oil inventories. The first report is at 21:30 GMT from the American Petroleum Institute.



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