Sunday, November 3, 2024
spot_img
HomeCurrent AffairsCrude Oil Prices Fell In Global Market

Crude Oil Prices Fell In Global Market

Oil prices fell in early Asia trade on Tuesday, with investors expecting that ongoing US inflation and higher interest rates would dampen consumer and industrial demand. Brent crude futures dropped by 44 cents, or 0.53 percent, to $83.27 a barrel. US West Texas Intermediate crude (WTI) also slipped by 51 cents, or 0.64 percent, to $79.29 a barrel. Both benchmarks fell by less than one percent on Monday as US Federal Reserve officials stated that they were waiting for more signs of slowing inflation before considering interest rate cuts.”Fears of weaker demand led to selling as the prospect of a Fed rate cut became more distant,” said analyst Toshitaka Tazawa at Fujitomi Securities.

Fed Vice Chair Philip Jefferson mentioned on Monday that it was too early to determine whether the inflation slowdown is long-lasting, while Vice Chair Michael Barr stated that restrictive policy needs more time. Atlanta Fed President Raphael Bostic also mentioned that it will “take a while” for the central bank to be confident that a price growth slowdown is sustainable. Lower interest rates reduce borrowing costs, freeing up funds that could boost economic growth and oil demand. On the other hand, the market appeared to be little affected by political uncertainty in two major oil-producing countries.

“While there has been an uptick in uncertainty in Iran, prices have since retreated some gains, as investors price in the status quo in terms of policies for now and the likelihood that any wider regional conflict remains off the table,” IG market strategist Yeap Jun Rong said in an email to Reuters. Iranian President Ebrahim Raisi, a hardliner and potential successor to Supreme Leader Ayatollah Ali Khamenei, was killed in a helicopter crash, while Saudi Arabia’s Crown Prince Mohammed Bin Salman postponed a trip to Japan because of the health of his father, the king.

“The death of the Iranian President and the health issue of the Saudi king do not seem to be affecting the market much, as it is unclear whether they will have an immediate impact on energy policy,” said Tazawa from Fujitomi. Investors are focusing on the supply from the Organization of the Petroleum Exporting Countries and its affiliates, together known as OPEC+. They are scheduled to meet on June 1 to set output policy, including whether to extend some members’ 2.2 million barrels per day of voluntary cuts. “Prices remain in wait for a catalyst to drive a breakout of the current range, with eyes still on any geopolitical developments, along with oil inventories data this week,” said Yeap. OPEC+ could extend some voluntary output cuts if demand fails to pick up, according to people with knowledge of the matter previously told Reuters.

Author

Latest Articles