The recent increase in bond yields has resulted in a decline in oil prices, as concerns over higher borrowing costs potentially weakening demand arise. Economic data, such as a report showing a significant increase in job openings, have fueled speculations of an interest rate hike by the Federal Reserve, which could keep rates elevated for an extended period.
While the Organization of the Petroleum Exporting Countries (OPEC) is expected to convene, it is unlikely that they will make changes to their output quotas. This is primarily due to the additional voluntary cuts agreed upon by Saudi Arabia and Russia, on top of the existing production reductions by OPEC. This measure to limit supply could act as a support for prices, even in the face of a dimming demand outlook.
The international benchmark for oil, Brent crude, experienced a 0.6% decline to $90.40 per barrel. However, prices remain 18% higher than they were three months ago. On the other hand, the U.S. standard, West Texas Intermediate, saw a 0.7% decrease to $88.57 per barrel.
According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, concerns regarding a potentially challenging economic situation in the United States if interest rates are further raised have been weighing down on prices in recent trading sessions.