Oil Prices Decline Ahead of Fed Decision
Caution in the Markets
Oil prices took a step back from recent highs as investors exercised caution before the Federal Reserve’s upcoming decision. This overshadowed news of a larger-than-expected decrease in U.S. crude inventories.
Price Movements
By 13:47 ET (17:47 GMT), U.S. crude futures were down 1.6% at $81.02 a barrel, while the contract slipped 0.9% to $85.72 a barrel.
U.S. Inventory Data
The Energy Information Administration’s report revealed a significant decline in U.S. crude stockpiles by 1.95 million barrels for the week ending Mar. 8, surpassing expectations of a draw of 0.9 million barrels.
Fed Decision Impact
The anticipation of the Federal Reserve’s interest rate policy announcement has led to a stronger dollar, affecting the oil market. Investors are on edge following recent U.S. inflation data, fearing a potential hawkish stance from central officials.
Global Supply Concerns
Despite these fluctuations, oil prices remain near their highest levels since November. This is partly due to tighter global supplies, exacerbated by Ukrainian strikes on Russian fuel refineries and signals from OPEC members hinting at production cuts.
Market Analysis
Analysts at ING noted that supply risks related to Russian refined products are supporting the market amidst expectations of a tightening period. The forward curve indicates trading in deeper backwardation, reflecting this anticipated shift.
Future Demand Outlook
While demand is expected to rise with major refineries resuming production and improved Chinese fuel demand post-Lunar New Year, the pace of growth in China’s oil imports has slowed down.
(Peter Nurse, Ambar Warrick contributed to this article.)
