Brent moves higher as market focuses on upcoming Fed meet
The front-month ICE Brent contract moved $1.79/bbl higher on the day, to trade at $77.93/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent’s price shed this week’s losses and moved higher on some supply concerns as Ukraine continued to attack Russia’s energy facilities with drones.
A fire broke out on a ferry loaded with 30 fuel tanks after it came under a drone attack in the Russian port of Kavkaz on Thursday. The port is situated in the town of Temryuk in southern Krasnodar region of Russia.
"The sustained damage caused the ferry in the port of Kavkas to sink," officials from the Krasnodar Region Task Force said. Seventeen crew members have been rescued from the ferry with fuel, Krasnodar region’s governor Veniamin Kondratyev said on his official Telegram channel.
For today, all attention will be on the US Federal Reserve’s (Fed) annual Jackson Hole Economic Symposium. The event will gather central bank leaders in Wyoming, US.
The oil market’s focus will be on Fed chairman Jerome Powell’s speech later today, which could shed more light on the upcoming September meeting where the central bank is largely expected to cut key interest rates.
“[Market] participants will be focused on Fed Chair Powell’s speech at Jackson Hole,” two analysts from ING Bank noted. “Markets are hoping that Powell sheds some more light on what the Fed may do at its September meeting,” they added.
Lower interest rates can support demand growth, as it makes dollar-denominated commodities like oil more affordable for holders of other currencies.
Downward pressure:
Brent’s price gains have been capped due to concerns about sluggish demand growth in China.
Oil consumption in the world’s second-largest consumer fell by 8% year-on-year to 13.55 million b/d in July, according to China’s General Administration of Customs (GACC).
“There are still worries about Chinese oil demand,” Price Futures Group’s senior market analyst Phil Flynn remarked.
Meanwhile in the US, worries about the country’s economic health grew after the US Bureau of Labor Statistics (BLS) revised the July employment report, showing a weaker-than-expected outcome.
US employers added 818,000 fewer jobs in the 12 months leading up to March 2024 than initially estimated. This news has added some downward pressure on Brent’s price.
“With a US jobs report still set to be released between Jackson Hole and the next FOMC [in September], Powell may choose not to make too strong a statement,” analysts from ING Bank added.
By Aparupa Mazumder
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