Oil prices decline in advance of additional central bank guidance on interest rates

21 Sep 2023 , 10:39 AM

Ahead of guidance from other central banks on their rate outlooks, oil prices declined in early Asian trade on Thursday after dropping by the most in a month in the previous session on expectations of a U.S. interest rate hike.

Brent futures for November delivery were down 44 cents, or 0.5%, at $89.18 per barrel. West Texas Intermediate crude (WTI) CLc1 in the United States decreased by 49 cents or 0.6% to $89.17.

Interest rates were remained steady by the U.S. Federal Reserve on Thursday, but it hardened its hawkish stance by projecting another rate increase by the end of the year, which could slow economic growth and fuel demand.

The Federal Reserve’s officials continue to predict that the benchmark overnight interest rate would peak this year in the range of 5.50%-5.75%, barely 0.25 percentage points higher than the present level.

Investors will be looking to policy pronouncements for hints on future changes on Thursday because it is highly anticipated that the central banks of Taiwan, Indonesia, and the Philippines would hold the key lending rates steady.

A day after showing signals that it had made progress in addressing Britain’s high inflation issue, the Bank of England will also reveal on Thursday whether it is ending a streak of interest rate increases that dates back to December 2021.

The U.S. energy data released on Wednesday showed that crude inventories decreased last week in accordance with predictions.

According to a weekly report from the U.S. Energy Information Administration (EIA), the high oil exports that led to the drawdown in crude stocks were offset by a decline in petrol and diesel stockpiles due to refiners starting their annual autumn maintenance.

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