Tuesday , March 21 2023

US Federal Reserve in focus


The pump jack runs on a well hired by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters

Oil prices fell more than $ 1 on Thursday, falling for the first time in six days after the US Federal Reserve dropped hopes of lower rates and trade talks with China and the US ended without progress.

The decline came despite a larger-than-expected decline in US stocks and a decline in crude production among OPEC members, along with Libya's declining exports, usually bullish drivers for the market.

Brent's international benchmark fell $ 1.06, or 1.6%, to $ 63.99 a barrel by 0037 GMT, while crude oil fell 93 cents, or 1.6%, to $ 57.65 a barrel. barrel, having dropped more than $ 1 earlier.

The Federal Reserve cut interest rates on Wednesday, but it is expected that the head of the US Central Bank said the move may not be the start of a lengthy series of cuts to strengthen the economy against risks, including global economic weakness.

"Although remarkably bullish US inventory reports (are) providing a very encouraging backdrop for the oil markets, oil prices have plummeted as any promising Fed monetary policy support has almost evaporated," Stephen Ines, managing partner, VM Markets said in a note.

Meanwhile, negotiators from the United States and China, the two largest economies in the world, closed a round of trade talks Wednesday with no visible sign of progress and postponed their next meeting until September.

In the meantime, crude oil stocks in the US have fallen for the seventh consecutive week, falling to their lowest levels since November, even as production recovers and net imports increase, the Energy Information Administration said on Wednesday.

Crude stocks fell 8.5 million barrels in the week ending July 26, far exceeding analysts' expectations of a 2.6 million barrel drop.

Oil production among members of the Organization of the Petroleum Exporting Countries (OPEC) reached an eight-year low in July, with another voluntary reduction in top exporter Saudi Arabia deepening losses caused by US sanctions on Iran and interruptions elsewhere in the group, Reuters said. .

Libya's National Petroleum Corporation announced force majeure in refueling crude oil from the country's largest oil field on Wednesday.

A monthly Reuters poll showed that oil prices are expected to be limited to near current levels this year, as economic slowdown and prolonged US-China trade slows demand.

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