Oil extends losses ahead of this week’s interest rate meeting at the US central bank, the Federal Reserve (the Fed), as investors tried to gauge the central bank’s appetite for further interest rate hikes, writes news media Reuters.

Monday morning, a barrel of the European reference crude Brent costs USD 73.97 against 76.48 on Friday afternoon. In the same timespan, US West Texas Intermediate oil fell from USD 71.68 per barrel to 63.39.

Thus, both benchmark crude futures posted second weekly decline. This is, among other, due to the disappointing economic data from China, sparking concerns about the country’s future demand.

”Oil prices are caught in a clash between two opposing forces, bearish asset allocators who point to monetary contraction and bullish oil speculators expecting lower inventories in the second half of 2023,” says Bank of America Global Research’s Francisco Blanch in a note to Reuters.

According to the news agency, most market participants expect the Fed to leave interest rates unchanged, following Monday’s meeting.

”We maintain our call for a soft landing in the US, but policy could tighten further if growth does not slow, and funding pressures in the banking system keep risks skewed to the downside,” says Morgan Stanley economist Seth Carpenter said in a note.