Oil prices fall amid Federal Reserve decision, increased inventory levels

(MENAFN) On Thursday, oil prices experienced a decline in early trading, influenced by several factors including the decision of the Federal Reserve to refrain from imminent interest rate cuts and a notable uptick in US crude oil and fuel inventories. brent crude futures saw a decrease of 14 cents, representing a 0.17 percent drop, settling at usd82.46 per barrel by 0039 GMT, while US West Texas Intermediate crude futures witnessed a decline of 16 cents, equivalent to 0.2 percent, reaching usd78.34. Both benchmarks had shown a slight increase of about 0.8 percent during the previous trading session.

The decision of the US Central Bank to maintain interest rates at their current levels, announced on Wednesday, contributed to market sentiment. The postponement of anticipated interest rate cuts until late December prompted investor reactions. Typically, high borrowing costs tend to dampen economic growth, potentially leading to a reduction in oil demand. Federal Reserve Chairman Jerome Powell, addressing the media after the conclusion of the two-day policy meeting, acknowledged the decrease in inflation without causing significant harm to the economy, stating there was confidence in its continuation.

In addition to monetary policy, market participants were closely monitoring international developments, particularly efforts to broker a ceasefire in Gaza. A resolution to this ongoing crisis would alleviate concerns regarding potential disruptions to oil supplies from the region. However, recent events such as the attack on a Greek-owned coal tanker near the Yemeni port of Hodeidah on the Red Sea, claimed by the Houthis in Yemen, underscore the persistent risks to maritime shipping and regional stability.

Supply dynamics also played a role in shaping market sentiment, with data from the Energy Information Administration revealing a larger-than-expected increase in US crude inventories last week. This surge was primarily attributed to a notable rise in imports, while fuel inventories also experienced a greater-than-anticipated growth. These factors collectively contributed to the downward pressure on oil prices observed in early trading.

MENAFN13062024000045015682ID1108328286