Crude Oil Prices Falls Over Weak Demand Outlook

Nigeria's Oil Output Dropped To 1.346m Barrels Per Day - OPEC

Oil prices fell on Thursday as minutes from the US Federal Reserve’s (Fed) latest meeting suggested that the shift to low inflation may take longer than planned. Brent crude traded at $81.61 per barrel, down 0.35% from the previous session’s close of $81.90 per barrel.

The American benchmark West Texas Intermediate (WTI) traded at $77.20 per barrel at the same time, down 0.48% from the previous session’s closing of $77.57 per barrel.

On Wednesday, the bank disclosed minutes from its most recent meeting, revealing that the policy rate may remain higher than expected for an extended period of time.

Concerns continue among US Fed officials regarding a lack of progress on inflation, while some members of the Federal Open Market Committee noted ‘a willingness’ to further tighten monetary policy during the last meeting if ‘risks to inflation materialize.’

The likelihood that the bank will begin reducing interest rates in September dropped to 50% after the minutes were made public, from 65% beforehand. Statements made by Fed officials over not acting hastily regarding interest rate cuts raised concerns that oil market demand appetite could slow down and put downward pressure on prices.

Statements from Fed officials about failing to act swiftly on interest rate cuts sparked concerns that the demand appetite in the oil market might wane and drive prices lower. US commercial crude oil inventories increased by 1.8 million barrels during the week ending May 17, according to data released by the Energy Information Administration (EIA) late Wednesday.

The EIA inventories showed a stock build that far exceeded market expectations of a drop of around 2.4 million barrels in the world’s largest oil-consuming country, signalling a drop in demand in support of lower prices.

Over the same period, strategic petroleum reserves, which are excluded from commercial crude stocks, also increased by about 1 million barrels.

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