Prices fall more than 3% on fears of Fed rate hikes

Oil prices fell more than 3% on Monday, following lower US stock markets after US service sector data raised concerns that the Federal Reserve may continue its aggressive policy. of tightening.

Brent futures fell $2.89, or 3.4%, to settle at $82.68 a barrel. US Crude Oil (WTI) fell $3.05, or 3.8%, to settle at $76.93 a barrel. Both benchmarks had risen more than $2 before reversing direction.

US service industry activity unexpectedly rebounded in November as employment rebounded, providing further evidence of the economy’s momentum as it braces for a predicted recession next year.

The news caused oil and stock markets to cut gains.

The data defies hopes that the Fed could slow the pace and intensity of its rate hikes amid recent signs of easing inflation.

“Macroeconomic jitters about the Fed and what they will do with interest rates are taking hold in the market,” said Phil Flynn, analyst at Price Futures group.

Previously supportive of the market, the Organization of the Petroleum Exporting Countries and allies including Russia, together called OPEC+, agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day (bpd) from November to 2023.

(Additional reporting by Noah Browning in London, Sonali Paul in Melbourne and Emily Chow in Singapore);