Oil markets monitor Fed commentary on rate hike clues

Front-month ICE Brent has declined by $1.75/bbl on the day, to $100.04/bbl at 09.00 GMT.

PHOTO: Fed Chair Jerome Powell may suggest rate hikes to curb soaring inflation in the United States. Getty Images

Upward pressure:

Saudi Arabia's suggestion to cut oil production in a "schizophrenic" market is gaining support among oil producers as they prepare for the next OPEC+ meeting on 5 September. New voices like Iran, Kuwait, Algeria and Venezuela have joined the chorus calling for potential cuts. OPEC president and Republic of Congo Oil Minister Bruno Jean-Richard Itoua has said that the proposal to cut output “aligns with our views and goals.”

The oil market is set to tighten rapidly as winter approaches and prices are still on track to top $120/bbl, Energy Aspects’ Amrita Sen has told Bloomberg Surveillance.

Downward pressure:

Markets are keenly watching any indication of a possible September rate hike from Fed Chair Jerome Powell today at the Jackson Hole Symposium. The US Federal Reserve’s hawkish stance and anticipation of a 50- to 70-basis point rate hike could weigh on crude prices.

OANDA's Ed Moya says, “Everyone is anticipating a big move in the dollar post-Powell and that will likely determine if we see oil prices continue to make a move towards $100-a-barrel level.”

By Konica Bhatt

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