The Fed’s hawkish remarks and China’s deflationary statistics could cause the demand for crude oil to decline.
Friday morning saw Brent crude oil futures trading at about $80 per barrel after US Federal Reserve Chair Jerome Powell hinted that interest rates may rise even more in the US.
At 9:52 a.m. on Friday, December crude oil futures on WTI (West Texas Intermediate) were at $76.12, up 0.50 percent, and January Brent oil futures were at $80.53, up 0.65 percent.
November crude oil futures were trading at 6,337 on the Multi Commodity Exchange (MCX) in the early hours of Friday morning, down 0.55 percent from the previous close of 6,372, and December futures were trading at 6,359, down 0.50 percent from the previous close of 6,391.
Powell stated at the International Monetary Fund’s research conference that the Fed is committed to achieving a monetary policy stance that is sufficiently restrictive to bring inflation down to 2% over time. He went on to say: “We are not confident that we have achieved such a stance.”
His remarks were preceded by similar hawkish remarks from other Fed officials. His remarks led markets to believe that interest rates in the United States would remain high for an extended period.
A high-interest rate scenario in the US is likely to have an impact on global crude oil demand because it makes dollar-denominated crude more expensive for those holding other currencies.
China’s recent economic indicators were also not encouraging. China reported deflationary figures for October on Thursday. According to market reports, such indicators could have an impact on global crude oil demand, as China is a major consumer of this commodity.
Furthermore, crude oil inventories in the United States have risen dramatically, indicating a drop in demand for the commodity. According to the American Petroleum Institute’s (API) most recent data release, crude oil inventories in the United States increased by 11 million barrels for the week ending November 3. This figure was recorded at a time when the market anticipated a 0.3 million barrel decline in inventories.
November natural gas futures were trading at 252.20 on the MCX in the early hours of Friday morning, down 1.83 percent from the previous close of 256.90.
December jeera contracts were trading at 44,000 on the National Commodities and Derivatives Exchange (NCDEX) in the early hours of Friday morning, up 0.53 percent from the previous close of 43,770.
November castor seed futures were trading at 5,902 on NCDEX in the early hours of Friday morning, down 0.86 percent from the previous close of 5,953.
