Oil slides on concerns that a possible interest rate hike in the US could weaken oil demand. A tropical storm off the US Gulf Coast, on the other hand, could negatively impact supply, reports news agency Reuters.

A barrel of the European reference crude, Brent, goes for USD 84.38 on Tuesday morning, compared to 84.99 dollars on Monday afternoon. Simultaneously, US benchmark West Texas Intermediate trades at USD 80.04, down from USD 80.56 on Monday afternoon.

US Federal Reserve Chairman Jerome Powell said on Friday that the central bank may need to raise interest rates further to cool stubborn inflation.

”It may be difficult for oil prices to maintain the strong bull trend in July at this stage. The US and European economies will face downward pressure in the fourth quarter until interest rates peak,” Leon Li, market analyst at CMC Market, told Reuters.

China’s faltering economic recovery is affected by a depressed real estate sector, weak consumption and declining credit growth, which has prompted Beijing to cut its key interest rate in an effort to boost activity in the country.

In the US, tropical storm Idalia, which has just lashed western Cuba and was almost a hurricane as it headed towards Florida, is threatening. The storm is likely to cause power outages and affect oil production on the eastern side of the US Gulf Coast.

This week’s focus will be on the US Consumer Price Index to be announced on Thursday and the payroll data and jobs report arriving on Friday.

(Translated using DeepL with additional editing by Simon Øst Vejbæk)