Oil prices drop for fourth consecutive session after Fed minutes

May 23, 2024 (MLN): Oil prices extended losses on Thursday after minutes from the Federal Reserve's most recent policy meeting indicated officials would keep interest rates higher for longer as they struggle to bring inflation down to target.

Brent fell for a fourth session to $81.46 a barrel, down by 0.54% on the day, after closing at the lowest level in three months on Wednesday.

While West Texas Intermediate crude (WTI) was at $77.05 per barrel, down 0.67%.

Fed minutes from a meeting earlier this month indicated a hawkish stance from officials. That adds another bearish element to an oil market showing signs of weakness ahead of an OPEC+ gathering, as Bloomberg reported.

Oil is still higher this year in part due to supply cuts from the producer group, although prices have eased since mid-April.

US crude stockpiles rose last week, while inventories at the storage hub at Cushing, Oklahoma, swelled to the highest level since July, according to government data.

“Oil is overall in a bearish momentum,” said Gao Mingyu, Beijing-based chief energy analyst at SDIC Essence Futures Co. “The biggest focus is still whether voluntary production cuts will be prolonged at the OPEC+ meeting.”

The cartel is scheduled to meet on June 01 and the group is largely expected to extend its current output cuts.

Alliance member Russia exceeded its production commitment in April and has pledged to make up for the extra supply, the nation’s Energy Ministry said Thursday.

Market measures that are flashing signs of weakness include the prompt spread for Brent, which is close to a bearish contango structure.

That would indicate ample supply. Money managers have also trimmed their bets on rising prices.

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