Oil sags as rate cut hopes rise

Oil sags as rate cut hopes rise
Oil sags as rate cut hopes rise

of interests

London (awp/afp) – Oil prices fell on Friday, weighed down by the prospect of high interest rates for a longer period of time in the United States, and in anticipation of the OPEC+ meeting, which will finally be held in line at the beginning of June.

Around 10:00 GMT (12:00 CET) the price of a barrel of Brent from the North Sea for delivery in July fell by 0.76%, to 80.74 dollars.

That of American West Texas Intermediate (WTI) of the same maturity dropped 0.83%, to 76.23 dollars.

The two crude oil benchmarks suffered from the fact that “the bets on rate cuts are fading”, due to economic data inspiring to keep them high for longer, summarizes Tamas Varga, of PVM Energy.

The minutes of the last meeting of the Federal Reserve (Fed) “revealed serious reservations among decision-makers about the effectiveness of the current cycle of monetary tightening” to reduce inflation in the United States, explains the analyst.

Last week’s weekly jobless claims in the country also fell, signaling good shape in the US job market, he added.

Furthermore, the S&P Global PMI index showed an acceleration in activity in the United States in May, rising to 54.4 points, its highest level in 25 months, well above the 51.1 points on which the economists predicted.

However, high interest rates in the United States can slow down American and global demand for oil.

They are also likely to favor the dollar in the future, which weighs on oil purchases, often denominated in this currency. The greenback, however, remained depressed at the start of the session.

The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies in the OPEC+ agreement will take place via videoconference on June 2, and not in Vienna (Austria) a day earlier, as initially planned, after a statement on the organization’s website.

Already at the November meeting, the alliance made a last-minute change and held the meeting virtually.

With just over a week to go before the meeting, “oil prices are likely to stand still”, estimates Barbara Lambrecht, analyst at Commerzbank, because “the members of the enlarged production cartel have so far been very discreet in their public statements, thus helping to limit price fluctuations in recent days.

The market expects that the meeting will decide to “renew the current production ceiling”, thinks Mr. Varga.

But according to the PVM Energy analyst, this “would probably not be enough” to improve the downward trajectory of prices, “in a surplus (crude) market”, where supply currently exceeds demand.

lul/ode/ktr

-

-

PREV miscellaneous/Justice – Calvi: a biker is killed in an accident
NEXT Fire in Greece this weekend: the crew of a yacht incriminated