By Anadolu Agency
June 17, 2024 5:00 am
Oil prices declined on Monday amid an inventory build in US indicating low demand, the US Federal Reserve’s (Fed) decision to reduce the number of rate cuts to one for this year and strong dollar index.
International benchmark Brent crude traded at $82.44 per barrel at 10.14 a.m. local time (0714 GMT), a fall of 0.22% from the closing price of $82.62 per barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $77.81 per barrel at the same time, a 0.31% drop from the previous session that closed at $78.05 per barrel.
Demand concerns in the US, the world’s biggest oil consumer, continues to put downward pressure on prices.
US commercial crude oil inventories increased by 3.7 million barrels to 455.9 million barrels during the week ending June 7, according to data latest data by the Energy Information Administration.
The inventory build, an indicator of weakening demand, was relative to the market prediction of a fall of around 1.2 million barrels.
Over the same period, gasoline inventories and strategic petroleum reserves also rose by approximately 2.6 million barrels and 300,000 barrels, respectively.
The Fed announced its monetary policy decisions and economic projections last week. The bank did not change the policy rate in line with expectations and kept it constant at 5.25–5.50%.
Following the meeting, Fed Chairman Jerome Powell said the timing was not right to start easing monetary policy.
Although inflation in the US showed signs of slowing down, the Fed reduced its interest rate cut forecast for this year from three to one. This decision increased concerns that the bank would maintain its tight stance in the fight against inflation for longer than expected fueling demand concerns.
The rise of the US dollar against other currencies was effective in the decline in oil prices. The strong dollar is expected to reduce demand by making oil more expensive for foreign currency users.
The US dollar index increased by 0.07% to 105.245 on Monday.
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