Oil Prices Set to Snap Winning Streak After Fed Delays Rate Cuts
Oil Prices on Track to End Winning Streak
Oil prices are expected to end a two-week winning streak after the U.S. central bank signaled that interest rate cuts could be delayed by at least two more months. However, there are indications of healthy fuel demand and supply concerns that could revive prices in the coming days.
Oil Futures Down as U.S. Central Bank Delays Rate Cuts
Oil futures were down 44 cents, or 0.5%, at $83.23 a barrel at 0524 GMT on Friday, while U.S. West Texas Intermediate crude futures were 48 cents, or 0.6%, lower at $78.13. Both benchmarks are on track to end the week lower after two straight weeks of gains.
Fed Governor’s Comments Impact Oil Prices
U.S. Federal Reserve policymakers are considering delaying interest rate cuts by at least another couple of months to monitor inflation signals and progress toward price stability. This decision could potentially slow economic growth and curb oil demand in the world’s largest oil consumer.
Healthy Fuel Demand and Supply Concerns
Analysts at ANZ research reported that U.S. crude oil inventories rose at a less-than-expected rate last week, while run rates at refineries ended a streak of declines and may increase in the coming weeks. JPMorgan’s high frequency demand indicators are showing oil demand rising 1.7 million barrels per day month-over-month through Feb. 21, likely benefitting from increased travel demand in China and Europe.
Impact of Middle East Hostilities on Oil Prices
Oil futures settled higher on Thursday as hostilities continued in the Red Sea, with Iran-aligned Houthis stepping up attacks near Yemen to show support for Palestinians in the Gaza war. Israel Prime Minister Benjamin Netanyahu’s war cabinet has approved sending negotiators to truce talks taking place in Paris on Friday as pressure mounts in the Middle East.
