Brent sheds on lower US GDP revision, ‘bearish’ Fed comments
The front-month ICE Brent contract moved $1.33/bbl lower on the day, to trade at $82.06/bbl at 09.00 GMT.
PHOTO: Oil barrels on the US flag. Getty Images
Upward pressure:
Brent futures found some support after the US Energy Information Administration (EIA) reported an unexpected drop in US crude stocks, easing some demand woes in the global oil market.
Commercial crude oil inventories in the US dropped by 4.16 million bbls to 455 million bbls in the week ending 24 May, the EIA reported.
Besides, oil market participants will closely monitor the OPEC+ meeting on 2 June amid growing expectations of a full rollover of the ongoing 2.2 million b/d supply cut into the second half of 2024.
“Reports have emerged which suggest the oil group is looking at options to extend production curbs into 2025,” ANZ Bank’s senior commodity strategist Daniel Hynes said. In such a case, Brent’s price is expected to gain upward momentum.
OPEC may further “tighten compliance” as several members of the coalition have breached their quotas this year with overproduction, Hynes further remarked.
Downward pressure:
Brent futures moved lower after the US Department of Commerce revised downward its GDP estimate for the first quarter.
The US gross domestic product (GDP), a key indicator of demand growth and consumer spending activity, increased at an annualised rate of 1.3% in the first three months of this year, down from the initial estimate of 1.6%, the commerce department said.
Recent remarks by the US Federal Reserve's (Fed) officials have fueled concerns that the central bank could keep interest rates at elevated levels for a longer-than-expected period.
“I think it's too soon to really be thinking about rate cuts,” Reuters quoted Dallas Federal Reserve President Lorie Logan as saying at an event in El Paso, Texas.
‘Higher-for-longer’ interest rates can reduce oil demand by increasing the cost of commodities like oil for non-dollar holders.
By Aparupa Mazumder
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