Crude Oil Lower; Demand Concerns Increase as Building Permits Slump

By Peter Nurse -- Oil prices weakened Tuesday, weighed by signs of a weakening U.S. housing market, but movements are limited ahead of the start of the latest U.S. Federal Reserve meeting.

By 09:30 ET (13:30 GMT), U.S. crude futures traded 1.2% lower at $84.34 a barrel, while the Brent contract fell 0.9% to $91.19.

U.S. Gasoline RBOB Futures were up 0.2% at $2.4696 a gallon.

The number of permits given to build new U.S. houses slumped in August, falling to their lowest level in two years, as higher building and borrowing costs tempered demand, prompting fears that higher interest rates were slowing economic activity in the world’s largest economy.

Housing starts offered a contrary view, surprisingly bouncing by over 12%, but this rebound is a conspicuous outlier to other recent data from the housing market, which have almost without exception shown the sector cooling off.

This news overturned earlier gains that followed a report from Reuters which indicated that the Organization of Petroleum Exporting Countries and allies led by Russia fell short of its output target by 3.583 million barrels per day in August, around 3.5% of global oil demand.

That said, volumes are thin with traders wary that the latest policy-setting meeting by the Fed, concluding Wednesday, will result in more aggressive monetary tightening, potentially slowing economic growth further and curbing demand at the world’s largest economy.

The Fed is broadly expected to raise interest rates by 75 basis points on Wednesday, and signal more hikes as it moves to curb inflation reaching a 40-year high.

Data released this week showed that U.S. road travel fell 3.3% in July, as high fuel prices weighed. These prices have recently dipped, but rising interest rates could further reduce discretionary spending.

The Fed isn’t the only central bank expected to hike this week.

The Riksbank in Sweden raised its key interest rate by a full percentage point to 1.75% earlier Tuesday, more than expected, setting an ominous precedent for a handful of other central bank meetings later in the week.

The Bank of England, the Swiss National Bank and the Norges Bank are all expected to raise interest rates on Thursday, potentially curbing economic growth in the region further.

Also limited gains Tuesday were reports that the U.S. intends to sell 10 million barrels from its Strategic Petroleum Reserve in November.

"This sale would be part of the Biden administration's announcement back in March to release stocks from the SPR to combat higher prices," said analysts at ING, in a note. "Under that initial announcement the DOE authorized the release of 180MMbbls of crude oil from the SPR. According to the DOE, roughly 155MMbbls has been released up until now - this further sale would take the total volume to around 165MMbbls."

The American Petroleum Institute will publish at 16:30 ET its estimate of U.S. crude stocks, with last week’s figure showing a hefty 6 million barrel addition.

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.7% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network
  • London Office
    One Financial Markets 

    1 Finsbury Market
    EC2A 2BN
    United Kingdom

    T:  + 44 ( 0 ) 203 857 2000
  • Dubai Office
    One Financial Markets 
    OT19-39 Central Park Tower
    Dubai International Finance Centre
    United Arab Emirates
    T: + 971 44 22 888

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: