Oil prices rise ahead of the Fed meeting as the Middle East crisis continues

1 Nov 2023 , 10:16 AM

Ahead of this week’s major meetings of central banks around the world, including the US Federal Reserve, oil prices slightly increased in early Asian trade on Wednesday. The market was also keeping a close eye on the most recent developments in the Israel-Hamas conflict.

After dropping $1.33 on Tuesday, Brent January crude futures increased 36 cents, or 0.4%, to $85.38 a barrel. The contract expiration saw Brent December futures close 4 cents down at $87.41 a barrel.

U.S. West Texas Intermediate crude futures gained 28 cents, or 0.3%, to $81.30 a barrel after losing $1.29 in the previous session.

Market sources quoting American Petroleum Institute numbers on Tuesday stated that while fuel stockpiles decreased by approximately 360,000 barrels last week, crude oil inventories increased by approximately 1.3 million barrels.

While rate cuts to encourage spending may result in an increase in oil consumption, interest rate hikes intended to control inflation may delay economic development and lower oil demand.

According to CME’s Fedwatch tool, the Fed, which concludes its meeting on Wednesday, is anticipated to keep interest rates unchanged.

According to a Eurostat flash estimate, October inflation in the Eurozone was at 2.9%, down from 4.3% in September. This was the lowest level of inflation in the Eurozone in two years, raising doubts about an impending interest rate hike by the European Central Bank.

On Thursday, the Bank of England will convene.

In the Middle East, Israeli airstrikes on Tuesday killed at least 50 Palestinians including a Hamas commander in a heavily populated refugee camp in the Gaza Strip.

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