June 12, 2023 (MLN): Oil prices fell on Monday with investors assessing the central bank’s desire for additional rate hikes ahead of the U.S. Federal Reserve meeting, while concerns about China's fuel demand growth and rising Russian crude supply weighed on the market.
Brent crude is currently trading at $73.97 per barrel, down by 1.19% on the day.
While West Texas Intermediate crude (WTI) is trading at $69.56 per barrel, down by 1.15% on the day.
Last week, Brent crude and WTI declined by 1.10% and 1.44% respectively.
Both benchmarks marked their second weekly decline as global economic concerns offset the boost in prices from Saudi Arabia pledging to cut production by 1 million barrels per day (bpd) in July.
Bank of America Global Research's Francisco Blanch said that the oil prices are caught in a clash between two opposing forces, bearish asset allocators who point to monetary contraction and bullish oil speculators expecting lower inventories in 2H23, as reported by Reuters.
The Fed's rate hikes have strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies and weighing on prices.
CME FedWatch Tool is pricing in a 27.6% chance of an interest rate hike at the upcoming June 13-14 meeting.
Most market participants expect the U.S. central bank to leave interest rates unchanged, while also closely monitoring the upcoming U.S. Consumer Price Index (CPI) figures for June to be released tomorrow.
Saudi Arabia has reduced its oil production four times in the past year to support oil prices by limiting the supply of the commodity.
Whereas, the Russian oil supply has remained relatively stable despite facing sanctions.
Russian oil exports to China and India have grown despite the implementation of the European Union's embargo and the Group of Seven's price cap mechanism that started in early December.
Copyright Mettis Link News
Posted on: 2023-06-12T12:24:24+05:00
