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Ndrew Wen
Mar 23, 2023 12:14AM ET
Another politic matter.
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Oil prices sink on weak Fed signals, OPEC uncertainty
Published Mar 22, 2023 10:02PM ET
Updated Mar 22, 2023 10:10PM ET
© Reuters
By Ambar Warrick
Investing.com -- Oil prices fell in Asian trade on Thursday tracking weak economic signals from the Federal Reserve, while media reports suggested that OPEC+ will likely keep output unchanged next month, despite a recent crash in prices.
A three-day recovery rally in crude ran out of fuel after the Fed hiked interest rates as expected, but downgraded its GDP outlook for the year.
Reuters also reported that the Organization of Petroleum Exporting Countries and allies (OPEC+) is likely to keep output unchanged during an April meeting, and will maintain a previously announced 2 million barrel per day cut.
Brent oil futures sank 1.2% to $75.82 a barrel, while West Texas Intermediate crude futures fell 1.3% to $69.98 a barrel by 22:06 ET (02:06 GMT). Both contracts were up more than 4% each from a 15-month low hit last week.
The Fed said it will likely raise interest rates further to curb high inflation, which analysts warned is set to further weigh on the U.S. economy. Fears of slowing economic growth have rattled oil markets this year, with the recent collapse of several U.S. and European banks exacerbating concerns over this trend.
The central bank expects the U.S. economy to grow 0.4% this year, down from previous expectations of 0.5%.
The report on OPEC+ production also disappointed some traders holding out for more supply cuts, given the steep losses in oil prices this year.
But on the other hand, U.S. oil demand showed some resilience as gasoline inventories fell far more than expected in the week to March 17. While overall U.S. inventories grew, a drop in oil product inventories showed that demand was improving amid better weather conditions.
The dollar also sank after the Fed’s comments, with traders betting that the Fed will only have enough economic headroom to raise rates once more. This benefited commodities priced in the greenback by making them cheaper for international buyers.
Consultancy firm Wood Mackenzie said on Thursday that China will drive at least 40% of an increase in global crude demand this year, as the country reemerges from COVID lockdowns.
But a Chinese recovery will provide a limited boost to prices, Mackenzie warned, stating that crude markets had largely adapted to ructions from the Russia-Ukraine war.
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Comments (6)
Prashant Kumar
Mar 22, 2023 11:37PM ET
nifty much better to buy.
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Rubbing Hands
Mar 22, 2023 10:39PM ET
Fake News!
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Rubbing Hands
Mar 22, 2023 10:39PM ET
15 min after my comment the article is already changed. These articles are a joke and these media outlets are a bunch of paid fairy's trying to scam everyone out of their money.
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Rubbing Hands
Mar 22, 2023 10:31PM ET
fed is also meeting in person so if prices are low then, there is a chance of adjustment. they don't meet in person when they plan to leave things unchanged.
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Petet Larkar
Mar 22, 2023 10:31PM ET
what u smok in ng?
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Rubbing Hands
Mar 22, 2023 10:21PM ET
oil closed Wednesday up and today is heading higher so far. this gal must be smoking some crack.
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