Sharp drop in oil prices

Oil prices have fallen sharply on concerns that dark clouds over economies will dampen demand. U.S. crude fell 5.6 percent to below $85 a barrel, the biggest one-day drop since September 2022. Despite signals that OPEC+ supply cuts were tightening the market, expectations of increased supply in the future and technical sell-offs triggered a sharp decline in prices. Brent crude traded down 5.6 percent to $86 a barrel. Oil prices, which rallied about 40 percent from June to the end of September, have started to fall. Concerns that interest rates will rise further have caused declines in stocks and bond markets, as well as oil, in recent weeks. The latest U.S. data showed that oil inventories rose for the first time in eight weeks. Meanwhile, Saudi Arabia and Russia, two OPEC+ countries, announced that they would continue production cuts until the end of the year. However, growing concerns that the Fed has not yet ended its interest rate hikes caused the dollar to rise. The dollar’s rise has also made commodities more expensive for most buyers. “Global growth looks set to take a big hit next year,” said Ed Moya, senior market analyst at Oanda, “and that means the outlook for crude demand is likely to be problematic. Investors have realized that the $100 price tag is still far away.”