Oil fell on Thursday as investors weighed the latest Federal Reserve interest rate decision as well as a mixed outlook on oil supply and demand. West Texas Intermediate futures were trading between $70 and $71 per barrel; a similar level to Fed Chair Jerome Powell said to expect further policy tightening and that rate cuts were not to be expected this year.
The Federal Reserve implemented an interest rate hike of 25 basis points this week; lower than the initially expected 50-point increase. Paul Horsnell, head of commodities research at Standard Chartered bank claimed that the 25-point rise was a lucky escape. “The main immediate downside risk was the FOMC hiking by 50bps, with that outcome avoided oil has held up pretty well.”
Horsnell referred to the price of Brent to prove his point, explaining that not much has changed since before the Federal Reserve announced its latest interest rate hike.