Weekly Decline in Oil Prices Despite No Decline in US Fed Rates, Brent Fell by 3% and Reached $81/bbl
There has been a two percent decline in Brent throughout the week and a decline of more than three percent has been recorded in WTI, but due to the signs of increasing demand and supply related concerns of fuel, there will be a rise in fuel prices in the coming week. There are strong chances of a bullish trend.
File photo: This is a view showing an oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia. Reuters/Alexander Manzyuk/file photo (Reuters)
Oil prices have fallen by almost three percent in the last session and after the important decision was taken by the US Central Bank policy maker that it may take at least two more months to cut the interest rate, due to which A weekly decline has been recorded in oil prices. Federal Reserve policymakers should delay cutting US interest rates for at least a few more months, which could slow economic growth and curb oil demand, Fed Governor Christopher Waller said.
Brent crude futures closed at $81.62 per barrel, down $2.05 or 2.5 per cent, while US West Texas Intermediate crude futures (WTI) closed at $76.49, down $2.12 or 2.7 per cent. A percentage decline has been recorded in Brent throughout the week, as well as a decline of more than three percent has been recorded in WTI, but due to signs of increasing demand and supply related concerns of fuel, oil prices will rise in the coming week. There are full chances of a bullish trend.
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Back home, on the Multi Commodity Exchange (MCX), crude oil futures expiring March 19 were up 0.05 per cent at Rs 6,356 per bbl, having oscillated between Rs 6,344 and Rs 6,498 per barrel during the session. The previous close was recorded at 6,353 per barrel.
Know what is the impact on crude oil prices?
– The Federal Reserve has decided to keep its policy rate stable in the range of 5.25 percent to 5.5 percent since July last year. Minutes from last month’s Federal Reserve meeting also show most central bankers were concerned about moving too quickly to ease their policy. However, some analysts say demand still remains largely healthy despite the impact of higher interest rates, including in the United States.
– JPMorgan’s demand indicator showed oil demand rising 1.7 million barrels per day (bpd) month-on-month through February 21, analysts said in a note. “This compares to a 1.6 million bpd increase seen during the previous week, which remains likely to benefit from rising travel demand in China and Europe,” analysts said.
-Gaza ceasefire talks were underway in Paris in what appears to be the most serious effort in weeks to halt the conflict in Palestine and release Israeli and foreign hostages. Tim Evans, an independent oil market analyst, said in a note that the ceasefire talks may give the market hope for an easing of geopolitical tensions.
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-Nevertheless, tensions are still rising in the Red Sea, with more shipping vessels forced to divert from the trade route following attacks by Iran-backed Houthi militants near Yemen on Thursday. U.S. energy firms this week added the most oil rigs since November, and the most in a month since October 2022, energy services firm Baker Hughes said.
Know which direction the prices of crude oil are going?
-Crude oil continued to see significant volatility, experiencing significant gains amid rising war tensions in the Middle East and favorable US economic data. According to analysts, ongoing tensions in the Red Sea due to a reported increase in attacks by Houthi forces on ships in support of Palestine during the Israel-Hamas conflict have contributed to increased volatility in crude oil prices.
-The US Energy Information Administration (EIA) reported a substantial increase in US crude oil stockpiles, rising by 3.5 million barrels for the week ended February 16 compared to an estimated increase of 3.9 million barrels.
”Despite this surplus, crude oil prices remained supported, indicating a complex interplay of factors influencing the market. We estimate that volatility in crude oil prices is going to continue. Technical analysis shows that support levels for crude oil range from $77.50 to $76.90, while resistance levels are expected between $78.90 and $79.60.
In Indian rupee terms, crude is expected to take support around ₹6,460 to ₹6,390, while resistance levels near ₹6,590 to ₹6,670,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
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