Oil Prices Dip as Fed Patience, Geopolitical Risks Weigh on Market

19 Feb 2024 , 10:02 AM

Oil prices experienced a slight decline on Monday morning as investors processed remarks from U.S. Federal Reserve officials indicating a more cautious approach to potential interest rate cuts. Brent crude futures slipped by 58 cents, or 0.69%, reaching $82.89 per barrel, while U.S. West Texas Intermediate crude decreased by 35 cents, or 0.44%, to $78.84 at 0138 GMT.

The market is awaiting clarity on demand direction from China following the conclusion of its week-long Lunar New Year holiday, coupled with subdued trading activity due to the Presidents’ Day holiday in the United States.

Key Points:

• Oil prices fell on Monday as markets reacted to hawkish signals from the Fed and lingering geopolitical tensions.
• Brent crude dipped 0.69% to $82.89, while WTI shed 0.44% to $78.84.
• Uncertainty surrounding China’s post-holiday demand and US Presidents’ Day muted trading activity.
• Fed officials’ comments indicating a ‘patient’ approach to rate cuts dampened oil demand outlook.
• Middle Eastern tensions persisted with Israeli-Palestinian conflict and Houthi attacks raising concerns.
• OPEC’s high spare capacity and IEA’s surplus forecast added downward pressure on prices.
• UN to vote on ceasefire in Israel-Hamas conflict, US likely to veto.

Russia announced its full control over the Ukrainian town of Avdiivka, marking its most significant territorial gain in nine months, coinciding with the impending two-year anniversary of its invasion.

The recent death of Alexei Navalny, a prominent critic of President Vladimir Putin, in a Russian Arctic penal colony raises questions about potential repercussions and the imposition of new sanctions on Moscow, which stands as the world’s second-largest oil exporter.