Global oil prices scaled back on Wednesday following European Central Bank’s (ECB) pledge to raise interest rates even further to rein in inflation.
Brent crude oil, the international benchmark for Nigerian oil, declined by 34 cents, or 0.36% to $92.83 barrel as of 1:13 pm Nigerian time. U.S. West Texas Intermediate crude shed 32 cents or 0.37% to $86.99 a barrel.
Philip Lane, the Chief Economist, ECB, said higher energy prices remain a “dominant driving force of inflation” in the eurozone by making imports more expensive.
“It is crystal clear that the appropriate monetary policy for the euro area should continue to take into account that the energy shock remains a dominant driving force of inflation,” he told an ECB meeting with bank representatives.
In the U.S, the Labour Department reported on Tuesday that the inflation rate rose by 8.3% year-on-year in the month of August, indicating that inflation pressures remain strong despite efforts to halt escalation and contain rising prices in the world’s largest economy.
Persistent increase in inflation rates in developed economies coupled with China’s tough COVID-19 restrictions is expected to impact demand and subsequently drag on oil outlook.
Data from China, the world’s largest importer of the commodity, shows tourism revenue declined 22.8% to 28.68 billion yuan ($4.14 billion). Also, trips made by tourists fell 16.7% from a year earlier to 73.4 million trips. Another indication of slowing economic growth.
“We believe travel for family gatherings, tourism and retail sales will be severely hit in coming months including the National Day Golden Week holiday from Oct. 1 to Oct. 7,” said Japanese brokerage and investment bank Nomura.
“The worsening tourism data may prompt more cuts of GDP growth forecasts on the Street,” Nomura wrote in a note on Tuesday.
Fed officials are set to meet next Tuesday and Wednesday to discuss the new inflation rate way above its 2% target.
