By Gina Lee
Investing.com – Oil fell in Asia on Friday morning, but remained above $ 70 on the market after the US Federal Reserve projected possible interest rate hikes earlier than expected.
It fell 0.79% to $ 72.50 at 12:36 am ET (4:36 am GMT) and slid 0.82% to $ 70.46.
The dollar has soared in both sessions after possible interest rate hikes expected in 2023, slowing demand for oil.
In the short term, demand for crude is increasing as some countries continue their economic recovery from COVID-19 and are easing restrictions on COVID-19. However, potential interest rate hikes will affect long-term growth prospects and eventually affect demand for oil, Westpac senior economist Justin Smirk told Reuters.
“The short term is all very positive. The question is how much more can go up, how much scope is there if you look at an environment where interest rates are going to go up,” Smirk said.
Meanwhile, the UK reported 11,007 new infections on Thursday, its biggest daily increase in the number of COVID-19 cases since February 19, compared to 9,055 the day before.
On the supply side, Iranian Deputy Foreign Minister Abbas Araqchi said talks between Iran and the United States to reactivate the 2015 Iran nuclear deal have come closer than ever to a deal.
“We made good and tangible progress on the different issues … we are closer than ever to an agreement, but there are still essential issues in negotiations,” said Araqchi.
“The renewed negotiations have raised concerns that this will lead to the United States removing the sanctions, resulting in a flood of oil hitting the market … despite this, fundamentals suggest that the market remains tight,” they said ANZ Research analysts in a note.
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