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Oil Prices Down

Oil Prices Dip Slightly Amid Federal Reserve’s Inflation Caution

Posted on May 22, 2024
Writer: James Miller

Oil prices experienced a marginal decline of less than 1% on Monday, influenced by statements from U.S. Federal Reserve officials expressing caution about interest rate cuts until further signs of declining inflation are observed.

Despite data indicating a decrease in consumer price pressures in April, top Fed officials remain hesitant to conclude that inflation is returning to the central bank’s 2% target sustainably. Lower interest rates, if implemented, could stimulate economic growth by reducing borrowing costs for consumers and businesses. 

Brent futures settled at $83.71 a barrel, down 0.3%, while U.S. West Texas Intermediate (WTI) crude settled at $79.80, also experiencing a 0.3% decline. The narrowing premium of Brent over WTI, continuing for the third consecutive day, indicates reduced profitability for energy companies exporting crude cargoes to the U.S. 

The market remained relatively indifferent to political upheavals in major oil-producing nations.

As OPEC+ prepares for a meeting on June 1, market sentiment seems less responsive to geopolitical developments, likely attributed to OPEC’s significant spare capacity. Data reveals Saudi Arabia’s crude oil exports rising for the second consecutive month in March, reaching a nine-month high. 

Despite a drone attack damaging the Slavyansk oil refinery in the Krasnodar region of Russia over the weekend, Russia suspended its ban on gasoline exports until June 30, with plans to reinstate it from July 1 to August 31.

For more insights, read the full article on Reuters.

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