Early Asian trading on Thursday witnessed a decline in oil prices, following the most significant drop in a month during the previous session. The impact of reduced U.S. crude stockpiles was offset by mounting expectations of interest rate hikes in the United States.
As of 0313 GMT, Brent futures for November delivery were down by 67 cents, equivalent to a 0.72% decrease, settling at $92.86 per barrel. Meanwhile, U.S. West Texas Intermediate crude (WTI) experienced a decline of 71 cents, or 0.79%, reaching $88.95, its lowest point since September 14.
Analysts from ING noted, “The Fed kept rates unchanged at yesterday’s FOMC meeting, as widely expected. However, it was still seen as a hawkish pause, which put some pressure on risk assets,” including the oil market.
The U.S. Federal Reserve, following its Federal Open Market Committee (FOMC) meeting, opted to maintain interest rates but adopted a more hawkish stance by projecting a potential rate hike before the year’s end. This decision raised concerns about its potential impact on economic growth and overall fuel demand.
Federal Reserve policymakers currently anticipate the bank’s benchmark overnight rate range reaching its peak this year at 5.50% to 5.75%, which represents a quarter of a percentage point higher than the current range. The adoption of a more hawkish stance also resulted in the U.S. dollar surging to its highest level since early March, thereby exerting downward pressure on oil prices.
