Oil rates dive after release of Fed meeting minutes
Date
5/23/2024 5:02:57 AM
(MENAFN) Oil rates experienced a decline on Thursday following the release of minutes from the recent meeting of the US Federal Reserve (Fed), which indicated that the transition to lower inflation levels might take longer than anticipated.
Brent crude, the international benchmark, traded at USD81.61 per barrel at 10:09 AM local time (0709 GMT), representing a decrease of 0.35 percent compared to the previous trading session's closing price of USD81.90 per barrel. Similarly, West Texas Intermediate (WTI), the American benchmark, traded at USD77.20 per barrel at the same time, marking a 0.48 percent decline from the previous session's close at USD77.57 per barrel.
The Fed's minutes from its latest meeting, published on Wednesday, revealed concerns among policymakers about the possibility of maintaining higher policy rates for an extended period. Moreover, some members of the Federal Open Market Committee expressed readiness to further tighten monetary policy if inflation risks materialize.
Following the release of the minutes, the likelihood of the Fed initiating interest rate cuts in September decreased from 65 percent to 50 percent. This shift in market sentiment raised concerns about a potential slowdown in demand for oil, which could consequently exert downward pressure on prices.
Additionally, data released by the Energy Information Administration (EIA) late Wednesday revealed a significant increase of 1.8 million barrels in US commercial crude oil inventories during the week ending May 17. This build in inventories exceeded market expectations of a decrease of around 2.4 million barrels, signaling weakened demand and contributing to the downward pressure on prices.
Furthermore, strategic petroleum reserves, which are not included in commercial crude stocks, also saw an increase of about 1 million barrels during the same period, further indicating a downturn in demand and supporting the downward trend in prices.
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