Adedapo Adesanya
By Adedapo Adesanya
Oil prices depreciated on Wednesday on a rising US Dollar after the US Federal Reserve kept interest rates steady as expected but signalled a possible hike.
Brent futures fell by 39 cents or 0.5 per cent to settle at $84.63 a barrel and the US West Texas Intermediate (WTI) crude declined by 58 cents or 0.7 per cent to close at $80.44 per barrel.
The US lender, which started raising interest rates in March 2022, held rates steady but left the door open to a further increase due to a strong US economy.
The US central bank boss, Mr Jerome Powell, said the situation remained something of a riddle, with officials willing to raise rates again if progress on inflation stalls.
He said the better course of action for now, given the uncertainties, was to maintain the benchmark overnight interest rate in the current 5.25 per cent -5.50 per cent range and see how job and price data evolve between now and the next policy meeting in December.
Interest rate hikes can slow economic growth and dampen oil demand.
The US Dollar rose to a four-week high against a basket of other currencies.
A strong Dollar makes it more expensive to buy fuel using other currencies, pressuring prices.
Crude futures were also pressured by an increase in US crude stocks last week as refiners undergoing seasonal maintenance restarted units more slowly than expected to avoid even larger gasoline stock builds.
The Energy Information Administration (EIA) reported an inventory build of a modest 800,000 barrels for the week to October 27.
A day earlier, the American Petroleum Institute (API) had estimated an inventory increase of 1.35 million barrels for the period, also reporting declines in gasoline and distillate stocks.
The EIA’s latest weekly estimate compares with a crude oil inventory build of 1.4 million barrels for the third week of October.
Meanwhile, efforts to contain the conflict in the Middle East appear to be productive, leading to a decline in the war premium to oil benchmarks.
Iran’s Supreme Leader Ayatollah Ali Khamenei called on Muslim states to cease oil and food exports to Israel, demanding an end to its bombardment of the Gaza Strip.
