Oil prices fell on Monday as investors turned their attention to the US Federal Reserve policy meeting this week.
Brent, the benchmark for two thirds of the world’s oil, was trading 1.04 per cent lower at $89.59 a barrel at 3.58am UAE time while West Texas Intermediate, the gauge that tracks US crude, was down 1.20 per cent at $84.51 a barrel.
“Hopes for a soft landing will be encouraged following better than expected business activity as well as positive retail sales and employment figures [in the US],” the National Bank of Kuwait said in a research note on Sunday.
“Additionally, major publicly traded corporations reported positive earnings which indicates that consumers and the US economy remain resilient in the face of high interest rates, elevated energy prices, and rising geopolitical tensions,” the lender said.
The Fed, which will meet on October 31 and November 1, is expected by analysts to hold interest rates steady.
Last week, Fed Chair Jerome Powell suggested that the central bank was inclined to maintain current interest rates at its November meeting while leaving open the possibility of a future increase.
The Fed has raised interest rates 11 times to its current range of 5.25 per cent to 5.5 per cent to rein in price increases without driving the economy into a recession.
Meanwhile, China, the world’s second-largest economy and top crude importer, is expected to report its October manufacturing and services purchasing managers' indexes (PMIs) this week.
China’s post-pandemic economic revival lost stream in the second quarter amid a property slump and weak consumer spending.
However, the country’s gross domestic product grew by 4.9 per cent year on year in the third quarter as the government introduced stimulus measures to revive growth.
Oil prices recorded a small loss last week after the US carried out strikes against two Iranian-linked sites in Syria, stoking concerns that the Israel-Gaza war will escalate into a broader conflict.
Brent crude is still up about 6 per cent since October 7 when Hamas attacked southern Israel, killing about 1,400 people, and taking more than 200 hostages.
Israel has retaliated with air strikes and a total siege of the Palestinian enclave, with the death toll exceeding 8,000.
On Monday, Israel's military said it carried out strikes against military infrastructure in Syria and Lebanon in response to rocket launches into Israeli territory.
