Brent loses momentum ahead of Fed meeting
The front-month ICE Brent contract has lost by $0.38/bbl on the day, to trade at $64.05/bbl at 09.00 GMT.
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Upward pressure:
Brent crude’s price has found some support after the American Petroleum Institute (API) reported a draw in US crude stocks.
US crude oil inventories declined by 4 million bbls in the week ending 24 October, according to the API estimates cited by Trading Economics.
Market analysts had expected a smaller draw of 2.9 million bbls. A drop in US crude stocks typically indicates higher demand and can lend some support to Brent's price.
“The American Petroleum Institute reported an across-the-board plunge in US crude as well as product inventories,” VANDA Insights’ Vandana Hari wrote.
Downward pressure:
Brent’s price has lost momentum ahead of the US Federal Reserve’s Federal Open Market Committee (FOMC) meeting, which is set to conclude later today.
Market participants are closely watching the meeting as they await the US central bank’s decision on a potential interest rate cut.
“This meeting isn’t about whether [Fed chairman] Jerome Powell cuts but rather how many [cuts are planned],” remarked SPI Asset Management managing partner Stephen Innes.
The FOMC is scheduled to meet again in December to discuss further interest rate reductions.
Higher interest rates in the US can dampen demand growth and make dollar-denominated commodities like oil more expensive for holders of other currencies.
By Aparupa Mazumder
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