Oil prices dip

21 May 2024 , 08:32 AM

Early Asian trading on Tuesday saw a decline in oil prices.

Brent crude futures had dropped 12 cents, or 0.1%, to $83.34 per barrel. West Texas Intermediate (WTI) oil fell 8 cents, or 0.1%, to $79.72 per barrel in the United States.

As U.S. Federal Reserve officials stated they were waiting for additional evidence of falling inflation before considering interest rate reduction, both benchmarks fell by less than 1% on Monday.

Vice Chair Philip Jefferson of the Fed stated on Monday that it is too soon to determine whether the inflation reduction is “long lasting,” while Michael Barr indicated that more time is needed to implement restrictive policies. Raphael Bostic, president of the Atlanta Fed, stated that the central bank will “take a while” to be certain that the slowdown in price growth is durable.

Reduced borrowing costs due to lower interest rates free up money that may increase demand for oil and spur economic growth.

According to traders and analysts cited by Reuters, weaker refinery demand and abundant supply are weakening the physical crude oil markets globally, which might lead to additional deterioration for benchmark crude futures.

However, the market didn’t seem to be much impacted by the political unrest in two significant oil-producing nations.

Hardliner and prospective successor to Supreme Leader Ayatollah Ali Khamenei, President Ebrahim Raisi of Iran, died in a helicopter crash, while Crown Prince Mohammed Bin Salman of Saudi Arabia postponed a trip to Japan due to the health of his father, the king.

Investor attention is mostly focused on supply coming from OPEC+, the Organisation of the Petroleum Exporting Countries and its affiliates. They will convene on June 1st to decide on output policy, which will include extending the voluntary reductions of 2.2 million barrels per day by a few members.

If demand does not increase, OPEC+ may continue some voluntary supply cuts, as previously reported by Reuters.

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