Oil prices fell on Wednesday due to multiple factors, including higher-than-expected U.S. crude oil inventories and uncertainty surrounding the Federal Reserve’s monetary policy decisions. Investors are watching closely as the U.S. central bank signals that it is in no rush to cut interest rates, despite pressure from former President Donald Trump to lower borrowing costs......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
Brent crude, the international oil benchmark, declined by 0.7%, trading at $76.19 per barrel. Meanwhile, the U.S. oil benchmark, West Texas Intermediate (WTI), dropped by 0.8%, settling at $72.46 per barrel, compared to its previous close of $73.02 per barrel.
The Federal Reserve’s cautious approach to interest rate cuts has contributed to concerns about economic slowdown in the U.S., the world’s largest oil consumer. During a congressional hearing, Federal Reserve Chairman Jerome Powell emphasized that the central bank is in no hurry to lower interest rates. He explained that the Fed would only consider cutting rates if inflation continues to decline or if the job market weakens unexpectedly.
This wait-and-see approach means that the U.S. economy could experience slower growth, which in turn could lead to reduced demand for oil. Additionally, recent data from the American Petroleum Institute (API) revealed that U.S. commercial crude oil inventories rose by 9 million barrels for the week ending February 7. This increase was significantly higher than market expectations of a 2.8 million-barrel rise, raising concerns about an oversupply of oil in the market.
If official figures from the U.S. Energy Information Administration (EIA), expected later today, confirm this large inventory build-up, oil prices could fall even further.
Meanwhile, geopolitical tensions continue to play a role in oil price movements. Reports indicate that Ukraine launched an attack on a Russian oil refinery in the Saratov region, causing a fire at the facility. The refinery is a key supplier of fuel products, including gasoline and diesel, to the Russian military. This incident has heightened concerns about potential disruptions in oil supply, limiting the extent of the recent price drop.
Additionally, former President Trump’s trade policies are adding further uncertainty to the oil market. His decision to impose a 25% tariff on steel and aluminum imports, as well as other tariffs on major U.S. trading partners, has raised fears of a trade war, which could negatively impact global economic growth and reduce demand for oil.
Overall, oil prices remain under pressure due to these combined factors, with analysts expecting continued volatility in the market.