Oil Drops After FOMC and Strong Inventories

West Texas Intermediate retreated from a one-week high after the Federal Reserve ended its asset-purchase program and production rose to the highest in more than three decades. Brent slid in London.

Futures fell as much as 1.2 percent in New York. The dollar strengthened a second day against the euro after the Fed’s announcement, undermining the appeal of commodities priced in the U.S. currency for protecting against inflation. U.S. crude stockpiles gained for a fourth week as production increased to 8.97 million barrels a day, the most since January 1983, according to the Energy Information Administration.

“It’s another negative factor for the oil market and for commodities in general, coming on top of an already oversupplied oil market,” Hans van Cleef, energy economist at ABN Amro Bank NV in Amsterdam, said by phone of the Fed’s move. “When you pull money out of the market, normally the first thing you’d sell is riskier assets.”

WTI for December delivery dropped as much as 99 cents to $81.21 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.45 at 11:46 a.m. London time. The contract climbed 78 cents to $82.20 yesterday, the highest close since Oct. 21. The volume of all futures traded was about 7 percent below the 100-day average for the time of day. Prices have decreased 17 percent this year.

Brent for December settlement declined as much as 87 cents, or 1 percent, to $86.25 a barrel on the London-based ICE Futures Europe exchange. The contract rose 1.3 percent yesterday. The European benchmark crude traded at a premium of $4.96 to WTI on ICE, compared with $4.92 yesterday.

via Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.