Crude oil prices held on to gains made earlier in the week today, as traders awaited the U.S. Federal Reserve’s latest interest rate decision, to be announced at 2 pm Eastern Time.
At the time of writing, Brent crude was trading at $68.33 per barrel, with West Texas Intermediate at $64.39 per barrel, both virtually unchanged from Tuesday’s close. Yesterday, prices were pushed higher by a Reuters report citing unnamed sources as saying Russian pipeline operator Transneft had warned oil producers might have to cut production as a result of the latest series of Ukrainian drone attacks on Russian refineries.
Transneft denied the report, saying it sought to cause reputational damage and that the goal was to “destabilize the situation within the context of the information war the West is waging” on Russia, business news daily Kommersant wrote, citing an official statement by the pipeline operator.
Today, however, oil prices will be all about U.S. interest rates. The market overwhelmingly expects a 0.25-point cut, which would bring the interest rate to between 4% and 4.25%, which would be the lowest since 2022. According to a BBC report, the cut may also set the stage for a whole series of rate cuts in the coming months. The report quoted a Wells Fargo senior economist as saying she expected a cumulative rate cut of 0.75 percentage points by the end of the year.
“The Fed knows that when the labour market turns, it turns very quickly, so they’re wanting to make sure they’re not stepping on the brakes of the economy at the same time the labour market has already slowed,” Sarah House told the publication.
“The market participants are waiting for any further developments regarding the potential of further Western sanctions on Russian supplies against a looming supply surplus expectation,” ING commodity analysts wrote in a note today. “There are suggestions that the European Union is considering sanctions on companies in India and China that enable Russia’s oil trade as part of an upcoming package of fresh restrictions,” they added.
Credit: Oilprice.com
