Oil Prices Sink As Fed Speech Looms

Hamilton Nwosa
Writer

Ad

What weapons China put on display at its military parade

Chinese President Xi Jinping oversaw a massed military parade in central Beijing on Wednesday to mark the 80th anniversary of the end of World War Two. Here are some of the weapons China's People's Liberation Army put on rare public display in a show of its growing prowess and ability to project power far from…

Trump accuses Xi of conspiring against US with Putin and Kim

US President Donald Trump has accused Chinese counterpart Xi Jinping of conspiring against the US with the leaders of Russia and North Korea. Trump's comments came as China hosted world leaders at its largest-ever Victory Day parade in Beijing on Wednesday - a showcase of China's military might. In a post on Truth Social, Trump…

Oil Prices Hold Steady After U.S. Sanctions on Iranian Crude Scheme

Crude oil prices stabilized today after inching up on Tuesday following the news of new U.S. sanctions on people involved in exporting Iranian crude disguised as Iraqi crude. At the time of writing, Brent crude was trading at $68.93 per barrel and West Texas Intermediate was trading at $65.42 per barrel, both slightly down from opening. On Tuesday, the…

Ad

Crude oil prices sank on Thursday afternoon while the market was eyeing the Federal Reserve’s speech for clues about future interest rate hikes.

At 3:00 p.m., ET, WTI had slipped $1.90 per barrel (-2.00%) to $92.99, with Brent crude slipping $1.33 (-1.31%) to $99.89—sinking under $100 again.

The downward trend is just the latest swing on Thursday as the market attempts to understand the impact that a rate hike will have on crude oil demand compared to the impact that an OPEC+ production cut would have on supply.

Federal Reserve Chairman Jerome Powell is set to speak on Friday at an annual economic policy symposium.

Earlier this week, OPEC+ sources said that the group could respond to what the Saudi oil minister said was a disconnect between the physical crude oil market and the paper one. Other OPEC+ sources confirmed that OPEC+ could consider making production cuts at the next meeting, although the topic has not been formally added to the agenda.

Further dragging down the price of crude oil is the possibility that Iran and the United States could agree on the terms of a new nuclear deal. A new nuclear deal would free Iran’s oil industry from U.S. sanctions, potentially increasing the amount of crude oil that the country is able to export.

Should Iran and the U.S. reach a deal, OPEC+ would be even more motivated to cut production.

While OPEC+ has threatened to cut production, it is questionable whether that means to cut production targets, which it is undershooting by more than 2 million bpd anyway, or whether it would be an actual production cut based on current production volumes. Either way, the specter of any cuts, whether to targets or production, has the power to raise prices—a reality that is spooking traders loathed to be on the wrong end of any sudden market swing.

NB: Julianne Geiger wrote this article for Oilprice.com

Ad

X whatsapp