Oil fell after four weekly gains as traders weighed prospects for another hike from the Federal Reserve against signs of a tighter market.

West Texas Intermediate dropped below $77 a barrel after closing Friday at the highest since late April. That upswing was driven by expectations supply cuts by OPEC+ would reduce global inventories. At the weekend, International Energy Agency Executive Director Fatih Birol said the market could return to a deficit.

Investors will likely focus on this week’s US central bank meeting at which policymakers are widely expected to deliver another rate increase to reduce inflation. The campaign of tightening risks tipping the US into recession, potentially harming energy demand in the world’s largest economy.

Oil remains lower this year despite the recent run of gains and production cuts by the Organization of Petroleum Exporting Countries and its allies including Russia. In Asia, there’s been persistent concern that China’s recovery lacks momentum, which has been a headwind for commodities including crude.

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Author: Jake Lloyd-Smith