Oil rates see mixed results amid Fed rate cut improbability, intensifying geopolitical tensions
Date
8/22/2024 7:46:25 AM
(MENAFN) On Wednesday, oil prices experienced mixed movements amid a volatile trading session influenced by various factors. Data showing an increase in US crude oil inventories and evolving expectations of interest rate cuts from the US Federal Reserve (Fed) contributed to the price fluctuations. Additionally, ongoing geopolitical conflicts in the Middle East, despite attempts at cease-fire, further impacted market dynamics.
International benchmark brent crude saw a modest increase of 0.1 percent, reaching USD77.26 per barrel as of 10:25 a.m. local time (0725 GMT), up slightly from the previous session's close of USD77.20. Conversely, US benchmark West Texas Intermediate (WTI) saw a slight decline of 0.04 percent, settling at USD73.14 per barrel, compared to USD73.17 in the prior session.
The mixed price movements reflect ongoing uncertainties surrounding the timing of potential Fed interest rate cuts. Current estimates suggest a higher probability of a 25 basis point rate cut in September. However, uncertainties regarding further monetary policy actions through the end of the year continue to influence oil market behavior.
Geopolitical tensions in the Middle East also play a role in shaping oil prices. Recent reports from a Palestinian news agency indicated injuries to Palestinians due to Israeli army actions and settler attacks. Despite efforts by the US, Qatar, and Egypt to broker a cease-fire and facilitate a humanitarian aid agreement for Gaza, progress has stalled. Israeli Prime Minister Benjamin Netanyahu's resistance to Hamas' demands continues to hinder negotiations. Additionally, data from the American Petroleum Institute (API) showed a 347,000-barrel increase in US crude oil inventories, contrary to the anticipated 2.8 million-barrel draw, further supporting downward pressure on prices. Official figures from the Energy Information Administration (EIA) are expected to confirm these trends, potentially leading to further price declines.
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