Brent falls as comments from Fed official dampen rate cut hopes
The front-month ICE Brent contract lost $1.07/bbl on the day from Friday, to trade at $83.10/bbl at 09.00 GMT.
PHOTO: Oil pump jacks. Getty Images
Upward pressure:
Brent futures found some support as geopolitical tensions in the Middle East remained elevated over the weekend. Hopes of a ceasefire agreement between Israel and Hamas have diminished as Israel continued its ground attack in Gaza over the past two days.
“Israel continued to move more Palestinians out of Rafah while expanding its assault on the densely populated city in southern Gaza through the weekend,” VANDA Insights’ founder and analyst Vandana Hari said.
Brent’s prices gained after Iraq’s oil minister Hayan Abdul Ghani reaffirmed on Sunday the country’s commitment to voluntary oil production cuts agreed within the OPEC+ group of oil producers, Reuters reported.
“Expectations of further constraints on OPEC output were also [price] supportive,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
The group is due to meet in June to discuss supply policies for the rest of this year.
Downward pressure:
Brent’s price dipped after remarks from the US Federal Reserve's (Fed) officials diminished hopes of interest rate cuts anytime soon this year.
Speaking at the Louisiana Bankers Association conference, Dallas Fed President Lorie Logan said upside risks to inflation in the US remains high, Reuters reported.
She further emphasised on uncertainty whether current monetary policy measures are sufficient to steer inflation towards the central bank's target of 2%.
"Oil markets shrugged off the impact of the Middle East conflicts and shifted attention to the world economic outlook again," New Zealand-based market analyst Tina Teng said.
The impact of higher-for-longer interest rates in the US include a decline in oil demand, as it increases cost of dollar-denominated commodities like oil.
By Aparupa Mazumder
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