Oil steady near eight-month low ahead of Central Bank rate hikes

Oil steadied near an eight-month low ahead of more inflation-taming rate hikes from central banks that are likely to suppress demand.

West Texas Intermediate traded near $84 a barrel after closing almost 2 per cent lower on Tuesday following a volatile session. The Federal Reserve is expected to raise interest rates by 75 basis points on Wednesday, and put numbers on the “pain” it’s been warning of when it publishes new economic projections.

Crude is on track for its first quarterly loss in more than two years as concerns over a global economic slowdown weigh on the outlook for energy demand. The Fed decision will be followed by other central banks from Europe to Asia, which are also expected to hike interest rates.

Despite the weak short-term outlook, Saudi Aramco said Tuesday that spare production capacity in the oil market might be wiped out once economies rebound, citing a lack of investment in fossil fuels as the main reason for the global energy crisis.

Crescent Petroleum Co. chief executive officer Majid Jafar echoed the sentiment, saying oil prices will stay high on “chronic underinvestment” in the sector.