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Oil prices keep falling, and people are worried about demand.

All eyes will be on the Fed’s interest rate policy decision on Wednesday

TOKYO Oil prices fell on Wednesday as investors feared that a further aggressive interest rate hike by the U.S. Federal Reserve could cause a recession and plunge fuel demand.

Brent crude oil futures fell 26 cents or 0.3% to $90.36 per barrel by 0040 GMT, after falling $1.38 on the previous day.

U.S. West Texas Intermediate crude oil was $83.74 per barrel, down 20c or 0.2%. On Tuesday, the October delivery contract ended down $1.28 while the more active November contract lost 1.42.

Related: Oil prices stay the same because the possibility of Fed rate hikes may slow down fuel demand.

Toshitaka Tazawa, an analyst with Fujitomi Securities Co Ltd. stated that “the market tone remained bearish because of concerns that the aggressive tightening in the U.S. monetary system and Europe would increase the likelihood of a recession” and “a slump in fuel consumption”.

He said that oil prices had been falling in anticipation of rate hikes. They may temporarily rise after announcements but will likely resume a downward trend on concerns over weakening demand.

Widely expected, the Fed will raise rates by 75 basis points later Wednesday as part of its efforts to control inflation. These expectations are impacting equities which move with oil prices.

This week, other central banks such as the Bank of England will also meet.

The dollar has risen in value due to higher rates. On Tuesday, it was at a two-decade peak.

According to market sources, which cited American Petroleum Institute figures Tuesday, U.S. crude oil and fuel stocks increased by approximately 1 million barrels during the week ending Sept. 16. The inventories of gasoline rose by approximately 3.2 million barrels and the distillate stocks by 1.5 million barrels. 

According to a Asian Trade extended poll, U.S. crude oil, distillate, and gasoline stockpiles are expected to have risen last Week, while gasoline inventories were lower.

The supply side is where the record breaking 3.58 million barrels per hour of the OPEC+ producer grouping – the Organization of the Petroleum Exporting Countries (and associates including Russia) – are falling, which amounts to 3.5% of global demand. This shortfall highlights the tight supply, even though recession fears are pushing prices lower.

Related: The weak dollar and supply worries cause oil prices to go up.

Aramco, the head of Saudi oil giant Aramco (2222.SE), said Tuesday that European plans to tax and cap energy bills for consumers were not long-term solutions to the global energy crisis. This was largely due to a lack of investment in hydrocarbons.

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