International Crude Oil Prices Decline by 1% Amidst Profit Booking.

International Crude Oil Prices Decline by 1% Amidst Profit Booking.

Asif Iqbal | September 21, 2023 | 05:11 PM IST | Breaking News | Follow on Google News

International Crude Oil Prices Decline by 1% Amidst Profit Booking.

Crude Market Reaction to Hawkish Fed Policy

In a recent development, international crude oil prices experienced a nearly 1% decline, primarily driven by traders looking to secure profits following a significant surge in prices. This downward movement in the oil market was further exacerbated by apprehensions of potential interest rate hikes by the US Federal Reserve. Analysts and experts in the field of commodities have been closely monitoring these developments, shedding light on the various factors contributing to this shift.

Around 3 pm on Thursday, the November contract of Brent on the Intercontinental Exchange was trading at $92.60 per barrel, marking a 0.99% decrease from its previous close. Similarly, the November contract of West Texas Intermediate (WTI) dropped to $88.79 per barrel, down by 0.97% from its previous close.

Hawkish Fed Policy and Its Impact on Crude Prices

Ravindra Rao, the Head of Commodity Research at Kotak Securities Ltd, explained that crude oil prices experienced a downturn due to the hawkish stance of the US Federal Reserve, which prompted investors to lock in some profits. This shift in investor sentiment is indicative of the potential for a tighter physical crude market in the near future.

He added, “The EIA (US Energy Information Agency) report showed that US crude inventories fell by 2.135 million barrels last week, along with a decline in distillate and gasoline stocks, while Crude stocks at the Cushing, Oklahoma, delivery hub reported draws for a sixth consecutive week to a 5-year seasonal low. Markets await the Bank of England policy decision today, and risk sentiments might remain limited.

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“Volatility Triggered by US Fed Meeting Outcome

Rahul Kalantri, the Vice President for Commodities at Mehta Equities, highlighted that crude oil witnessed high volatility and extended its decline following the US Federal Reserve meeting outcome. The Fed’s comments created selling pressure in global commodity markets. However, he also noted that tight global supply, driven by OPEC+ output cuts and the declining US oil stocks, continues to support crude oil prices.

Material Tightness in Global Supply and Record Demand in 2023

ICICI Securities emphasized that Saudi Arabia and Russia’s decision to persist with production cuts of 1.3 million barrels a day (mb/d) has resulted in “material tightness” in the global supply of oil. Additionally, they pointed out that OECD oil inventories for recent months have fallen significantly below historical levels. The forecast for 2023 indicates that crude demand is set to reach a new record, largely attributed to increased diesel demand, potentially exacerbating the ongoing supply crunch.

Asif Iqbal

Asif Iqbal is a seasoned news writer with a passion for delivering the latest updates to the public. Currently serving as the senior writer at VoM News, a prominent news outlet known for its comprehensive coverage of diverse topics, Asif has established himself as a reliable source of information. With a keen eye for detail and a knack for storytelling, he consistently provides readers with well-crafted articles that cover a wide range of news categories. His dedication to journalistic integrity and his commitment to staying ahead of the news curve make him an invaluable asset to Vom News, ensuring that readers are always well-informed on the issues that matter most. You can find his work and stay updated on current events by visiting vomnews.in.