Stephanie Kelly
NEW YORK (Reuters) – Oil prices saw a small see-saw trade on Friday as investors swallowed a warning from the Federal Reserve that there was no quick fix to inflation.
Federal Reserve Chairman Jerome Powell said the U.S. economy will need tight monetary policy “for some time” before inflation is contained.
Still, data point to a slight decline in inflation, with the Fed’s closely watched price index of consumer spending falling to 6.3% on an annualized basis in July from 6.8% in June. He also eased his inflation expectations in July, based on the University of Michigan data.
But Powell said, referring to the Federal Open Market Committee, which makes central bank policy decisions, “a month-long improvement needs to be seen by the committee before it can be sure inflation is declining.” It falls far short of things.
“The market is concerned that Fed Chairman Powell has been somewhat hawkish on inflation,” said Phil Flynn, an analyst at the Price Futures Group in Chicago.
Brent crude futures fell 1 cent to $99.33 a barrel by 1:13 pm EDT (1713 GMT). US West Texas Intermediate (WTI) crude futures fell 33 cents to $92.19 a barrel.
Both contracts were up or down by $1 over the course of the session.
Overall, Brent is on track to gain about 2.6% over the week, while WTI was set to gain 1.5%.
Some European Central Bank policymakers hope to discuss a 75 basis point rate hike at their Sept. 8 policy meeting, even as the risk of recession looms, as the inflation outlook deteriorates. Five sources with direct knowledge of the process told Reuters.
Price falls limited as OPEC’s de facto leader Saudi Arabia warned on Monday of possible production cuts to offset return of Iranian barrels to oil markets if Tehran reaches a nuclear deal with Western powers was targeted.
On Friday, the United Arab Emirates became the latest OPEC+ member, which it said was consistent with Saudi Arabia’s views on the oil market, a source familiar with the matter told Reuters.
Commerzbank said in a report: “The impression remains that Saudi Arabia will not tolerate any price drop below $90. can be considered,” he said.
In US supplies, the number of oil drilling rigs showing future production increased from 4 to 605 in the week ending Aug. 26, Baker Hughes Co said Friday.
(Reporting by Stephanie Kelly, New York; additional reporting by Rowena Edwards, London; Sonali Paul, Melbourne; Emily Chow, Kuala Lumpur; editing by Jason Neely, David Goodman, Susan Fenton, David Gregorio)
(Only the headlines and photos in this report may have been modified by Business Standard staff. The rest of the content is auto-generated from syndicated feeds.)
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