Oil Prices Fall in Asia Amid Fed Comments and OPEC+ Decision Awaited
Oil prices took a dip in Asia on Friday following remarks from a Federal Reserve official that reinforced expectations of prolonged higher interest rates, setting the stage for a crucial US inflation report later in the day, as reported by Reuters.
The market, anticipating a decision on production cuts from OPEC+ over the weekend, was impacted by an unexpected increase in US gasoline stocks during overnight trading.
Brent futures saw a decline of 3 cents, or 0.04 percent, to $81.83 per barrel at 9:01 a.m. Saudi time, while US West Texas Intermediate crude dropped 10 cents, or 0.13 percent, to $77.81.
Dallas Federal Reserve President Lorie Logan expressed concerns about potential inflation risks despite recent moderation, emphasizing the need for the central bank to remain adaptable and keep all options open as it monitors data and decides on its course of action.
Market strategist Yeap Jun Rong noted a sense of caution ahead of the release of a pivotal US inflation gauge later in the day. The April report on personal consumption expenditures, a key inflation index for the Fed, is awaited in the global market.
Recent weeks have seen pressure on the oil market due to expectations of sustained higher US borrowing costs, which could constrain capital and impact crude consumption.
On the inventory front, US crude oil stocks decreased by 4.2 million barrels to 454.7 million barrels for the week ending May 24, according to the Energy Information Administration. However, gasoline inventories rose unexpectedly, signaling weaker demand ahead of the Memorial Day weekend.
Looking ahead, OPEC+ is working on a complex deal expected to be finalized at its upcoming meeting on June 2, aiming to extend deep oil production cuts into 2025. This move, if implemented, could have significant implications for oil prices.
Market expert Yeap highlighted the importance of the OPEC+ meeting, stating that any additional cuts would come as a surprise and could impact the market significantly. The current production cuts by OPEC+ members, led by Saudi Arabia and Russia, amount to 5.86 million barrels per day, representing around 5.7 percent of global demand.