Oil rose, paring some of its weekly decline, as Federal Reserve Chair Jerome Powell’s speech on the path for interest rates largely matched traders’ expectations.
(Bloomberg) — Oil rose, paring some of its weekly decline, as Federal Reserve Chair Jerome Powell’s speech on the path for interest rates largely matched traders’ expectations.
West Texas Intermediate futures rose to around $80 a barrel, though still were on pace for a 1.9% drop for the week. Powell stuck to the message he has emphasized this year, that more tightening remains possible to bring inflation back down to 2%. In addition to Powell’s remarks, China unveiled a further easing of its mortgage policies to halt a slump in its ailing property market.
“We would label the comments benign and neutral versus expectations, but for people who need a ‘hawkish or dovish’ appellation, we’d go with the latter,” Adam Crisafulli, founder of Vital Knowledge, said in a note to clients. “It sounds like the Fed is finished hiking rates — which is also what most people assumed — with the main debate now being the length of the ceiling.”
So far this week, crude has been hit by a double punch of factors impacting supply and demand. US officials privately acknowledge they’ve gradually relaxed enforcement of sanctions on some Iranian oil sales, while there are also talks over a possible easing of sanctions with Venezuela. Faltering growth in China and abysmal economic data in Europe have also dimmed the outlook for demand.
Crude is now trading roughly where it started the year, despite efforts by OPEC+ linchpins Saudi Arabia and Russia to boost prices by curbing supply. Lingering expectations that the Fed isn’t completely done with its campaign of monetary tightening have also added to headwinds.
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