While waiting for the Fed, the price of oil continues to fall

On Federal Reserve day, oil prices extended losses in Asian trade, after falling more than 3% to six-month lows in the previous session on worries about excess supply and demand.
At around 8.20 am, waiting for the European stock exchanges to open, WTI futures were trading at 68 dollars a barrel, with a decrease of 0.58% and those on Brent at 72 dollars a barrel, at -0.59%.
Oil prices remain in the spotlight after posting their longest weekly losing streak since 2018, with declines of around more than a quarter from this year's peak in late September.
Forecasts of a slowdown in Chinese consumption growth and persistent risks of recession in the United States make the demand outlook bleak.
In this context of weakness, the Fed meeting plays an important role for the price of crude oil.
The oil market, in fact, weakened in overnight trading.
Stronger-than-expected US inflation data for November have strengthened views that the Federal Reserve is unlikely to cut interest rates early next year, resulting in lower consumption.
Oil prices falling for these reasons The oil price is vulnerable to the decisions of central banks, as restrictive monetary policy, with interest rates at record levels, slows down investments, consumption and therefore demand in general.
With a weakened growth environment, crude oil use also declines and prices become depressed.
For this reason, today's Fed meeting on Wednesday 13 December could have repercussions on prices, especially if Powell maintains a cautious and rather pessimistic tone on the possibility of starting to cut rates at the beginning of 2024.
A lower cost of money would help investors consumption and the demand for oil itself.
Meanwhile, Russia's weekly average crude exports jumped to the highest since July, analysts at ANZ said.
The data compounds concerns about oversupply and casts doubt on the recent agreement on production cuts by the Organization of the Petroleum Exporting Countries and its allies, OPEC+.
The U.S.
Energy Information Administration also raised its forecast for 2023 supply by 300,000 barrels per day to 12.93 million barrels per day, compared to its previous report.
The bearish outlook puts oil on track to continue falling through the week, after seven consecutive weeks of declines.

Author: Hermes A.I.

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