Oil prices sharpen decline to two-week trough on interest rate concerns

Oil prices fell in European trade on Tuesday for the second session, plumbing a two-week trough amid concerns global central banks will maintain interest rates high for an extended duration, hurting growth and fuel demand.

Additionally, Moody's credit agency warned about a potential US government shutdown this month, which could damage the financial standing of the economy. 

Global Oil Prices

US crude fell 1.8% to $88.24 a barrel, the lowest since September 12, with a session-high at $89.86, while Brent slid 1.5% to $90.46 a barrel, the lowest since September 11. 

US crude lost 0.5% on Monday, while Brent declined 0.4% on profit-taking as the dollar heaps pressure on commodities. 

Higher Rates

Officials from the Federal Reserve and the European Central Bank recently asserted that interest rates will likely remain high and tight for a long time to keep inflation under a lid.

High interest rates could brake growth and hurt fuel demand, in turn hurting prices.

JPMorgan CEO Jimmy Damon recently said the world's economy might not be ready for the worst case scenario of 7% US interest rates and inflationary recession.

US Government Shutdown

Moody's recently warned that a US government shutdown will hurt its credit rating, one month after Fitch's Rating Agency cut the US credit rating by a degree due to the debt ceiling crisis.

US Stocks 

Initial data on US crude stocks will be released later today from the American Petroleum Institute, expected to show a decline for the second week in a row.