Oil posts sharp declines on Fed rate hike prospects

By Sibel Morrow

ANKARA (AA) - Oil prices fell on Monday, extending losses from last week's recession fears, as the US Federal Reserve signaled more interest rate hikes, putting an end to hopes of an economic recovery.

International benchmark Brent crude traded at $86.89 per barrel at 10.08 a.m. local time (0708 GMT), a 0.83% decrease from the closing price of $87.62 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $79.48 per barrel at the same time, a 0.76% loss after the previous session closed at $80.11 a barrel.

Investors are focused on crude oil demand side risks, with indicators pointing to US Fed members raising interest rates quickly, strengthening the dollar, and putting downward pressure on dollar-indexed oil prices.

The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, rose 0.38% to 107.23.

Fears were boosted after the president of the Federal Reserve Bank of St. Louis, James Bullard, said Thursday that the Federal Reserve may have to raise its benchmark interest rate much higher than it has previously projected to get inflation under control.

Demand concerns increased after China recorded its first coronavirus death since May 26, despite the fact that the number of cases is negligible in comparison to the population.

The policy, which aims to suppress COVID-19 cases where they occur and break the chain of transmission by requiring lockdowns, widespread testing, intensive contact tracing, and quarantines, is also having a significant negative impact on the country's economy.