Oil Prices Steady Ahead of OPEC+, Fed Meetings
Oil prices were little changed on Wednesday, rebounding from the previous session’s lows over signs of easing inflation in the United States (US), the world’s largest oil-consuming country while the market continues to be over-cautious ahead of Organisation of Petroleum Exporting Countries and allies (OPEC+) and the US Federal Reserve (Fed) meetings.
International benchmark Brent crude traded at $85.52 per barrel, a 0.07% increase from the closing price of $85.46 a barrel in the previous trading session. The American benchmark West Texas Intermediate (WTI) traded at $79.03 per barrel at the same time, a 0.20% gain after the previous session closed at $78.87 a barrel.
Prices slightly rose as the Fed’s preferred inflation indicator eased annually to a 4.4% gain in December 2022, down from a 4.7% increase in November, according to the Commerce Department figures released last week.
The softening in the year-on-year figures is a result of the Fed’s aggressive monetary tightening cycle and interest rate increases last year. The US central bank made a total of 425 points rate hikes on seven occasions last year to fight record-high inflation that climbed to its highest level in over 40 years by mid-2022.
The Fed’s first 2023 two-day meeting will conclude on Wednesday and is widely expected to result in a 25-basis-point rate hike.
Negative economic predictions of IMF loom on prices
The markets also focused on OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting later on Wednesday. Price increases were capped after gloomy economic expectations of the International Monetary Fund. The IMF has revised up its outlook for the global economy in 2023 but still expecting a slowdown this year before a rebound in 2024.
According to an IMF report released late Monday, the world gross domestic product growth rates will remain weak due to the ongoing Russia-Ukraine war and high inflation figures.
The world economy is expected to grow 2.9% in 2023, upgraded from 2.7% in the IMF’s October report, but down from 3.4% expansion for 2022. Estimates of a massive rise in the US crude oil stockpiles also exerted downward pressure on prices.
Late Tuesday, the American Petroleum Institute (API) announced its estimate of a rise of nearly 6.3 million barrels in US crude oil inventories relative to the market expectation of a 1 million barrels fall.
Leading to investor caution, the new projected massive increase in crude stocks signalled falling crude demand in the US, the world’s largest oil consumer, and weighed on oil prices.
Russia Revenue Slumps
Elsewhere, the price of Russia’s flagship crude, Urals, posted a year-on-year decline of 42% in January, official figures showed on Wednesday. Russian Urals crude oil traded at $49.48 per barrel in January, down from $85.64 per barrel in the same period of last year, recording an annual decline of 42%, according to a statement by the Finance Ministry.
Deputy Prime Minister Alexander Novak said earlier in January that the discount on Russian oil grew in January mainly due to the rise in freight prices. Due to the Russia-Ukraine conflict, Western countries such as the US, UK, Australia, and Canada suspended Russian crude imports, while EU countries completely cut off Russian crude supplies beginning on Dec. 5.
Several Western energy companies also halted oil trade with Russia, prompting Moscow to focus on trade in Asia, mainly India and China. In addition to the EU’s oil import ban on Russia, the Group of Seven countries imposed a price cap of $60 a barrel on Russian oil imports. # Oil Prices Steady Ahead of OPEC+, Fed Meetings
>>>Naira Challenges Raise Possibility of Materials Devaluation – Report
