Oil prices are on a downward trend again this week, with Brent crude expected to fall by around 3% over the weekend. Reutersand West Texas Intermediate are set to fall about 4% unless there is a last-minute reversal by the end of the day today.
Crude oil prices are trading at their lowest levels in nearly three months. BloombergTraders remain fixated on U.S. interest rates. The Fed has signaled that current rates are needed to keep inflation in check, and Reuters reports that some Fed officials are not opposed to further rate hikes rather than cuts, but there is no good news there.
After next week, they may move away from interest rates to see how the start of the U.S. driving season is changing demand patterns, or not.
“The Fed’s hawkish interest rate outlook and the likelihood of rates remaining high for longer has dampened demand sentiment and weighed heavily on oil prices this week,” Priyanka Sachdeva, analyst at Philip Nova, told Reuters.
The latest Fed announcement was also the focus of commentary from ING commodity analysts, who noted that the minutes of the latest Fed monetary policy meeting had a bearish impact on crude oil indexes.
“Low oil prices are increasing the likelihood that OPEC+ countries will fully roll over their additional voluntary supply cuts until later this year,” Warren Patterson and Ewa Manthey said. I have written.
The weekly increase in crude oil inventories, according to Energy Information Administration estimates, has added further pressure on oil prices this week and strengthened the expectation that OPEC+ will extend its 2.2 million barrels per day (bpd) production cuts into the second half of the year. Failure to do so at this point would be highly counterproductive to the purpose of the production cuts, which is to keep prices above a certain level.
By Irina Slav of Oilprice.com
