A new jump in oil prices and the Federal Reserve keeps interest rates unchanged

A new jump in oil prices and the Federal Reserve keeps interest rates unchanged

A new jump in oil prices and the Federal Reserve keeps interest rates unchanged

A new jump in oil prices and the Federal Reserve keeps interest rates unchanged: Oil rose again after a setback in the early part of the week,
coming close to ending this week on gains of more than 3%, backed by declining U.S. stocks,
giving the impression of better oil demand. 

Evest follows what is happening in the commodity trading market in the following report. 

Oil jumps by more than 1% in the morning session

The prices of black gold benchmarks continue to rise during today’s trading after rising the previous day to their highest levels in two weeks against the backdrop of declining energy reserves data in the United States.

West Texas Intermediate crude oil rose to $73 per barrel on Thursday morning, driven by a weaker dollar and shrinking reserves in the United States, which are currently at their lowest level since January 2020, the pre-pandemic period.

The price of West Texas Intermediate crude listed on the NIMEX Commodity Exchange in the morning segment
of Thursday’s session rose by about 1% and crossed the $73 limit per barrel.

At the same time, the price of Brent crude listed on the European ICE Exchange rose by about 0.8% and higher to $75.30 per barrel.

For now, it seems that the massive sell-off in the market caused by the hype associated with the OPEC+
items from over a week ago have already been avoided,
and the price of the commodity has returned upwards in the medium term.

The increased demand for fuel is confirming these upward trends, as evidenced by the decline in the latest reading of United States crude stockpiles. 

The Government Energy Information Administration reported on Wednesday that U.S. crude oil reserves had fallen by another 4.089 million barrels last week, exceeding analysts’ expectations, adding some positive morale to the market.

Last week’s decline in US oil reserves by 4.1 million barrels is the lowest level since January 2020. 

Gasoline inventories declined by 2.3 million barrels and distillates by 3.1 million barrels.

Expert forecast

On average, experts predicted a decrease in oil reserves by 2.5 million barrels, gasoline by 1.3 million barrels, and distillates by 1.6 million barrels.

Reserves in Cushing, where Nymex-traded oil is stored, fell by 1.3 million barrels during the week.

Although the current level of raw material stocks in the United States is the lowest since January 2020, that is, that is, in the run-up to the pandemic.

However, the status regarding the coronavirus is not over yet, as more fascism is emerging in many regions of the world.

In a number of Asian countries, such as Thailand, Indonesia,
and South Korea, increasing numbers of infections have been recorded,
which has no positive impact on future fuel demand.

The situation in South America

The status has also worsened in South America, and countries such as Argentina, Ecuador, Colombia, Cuba,
and Paraguay is facing a large number of deaths.

Despite the U.S. vaccination program, the U.S. economy still has a lot to catch up on in terms of hiring,
Federal Reserve Chairman Jerome Powell said Wednesday evening in a speech summarizing the two-day meeting of the Federal Open Market Committee. 

According to the Central Bank, inflation may remain above 2% for a few more months.

This may contribute to a weaker US currency and support higher commodity prices.

According to experts, traders in the futures market are interested in purchasing oil futures,
but news from the coronavirus front does not allow oil to increase prices any further.

The price of Brent crude remains volatile on a small scale of $73 to $75 per barrel. 

Jerome Powell makes unclear statements

Fed Chairman Jerome Powell noted that future decisions on inflation and interest rates
depend on the dynamics of the spread of the Delta coronavirus strain and the slowdown in the economic recovery. 

Market participants wanted to hear about the timing of the QE program,
but Powell emphasized that he wanted to get strong employment numbers first. 

In other words, the economy is moving in the right direction, but the conditions to start discussing changes in the bond purchase program are not yet in place. 

There will be an estimate of GDP for the second quarter (expected to grow by 8.6% compared to the first quarter)
in the United States on Thursday, along with traditional data on initial claims for unemployment benefits.

The rising desire for global risk was facilitated by the recovery of inflationary expectations in the United States,
due to light Federal Reserve statements at the end of the meeting. 

So far, the Federal Reserve is not even discussing the possibility of raising the key interest rate,
and reducing stimuli, according to Powell, is not a possibility in the near future. 

It can therefore be expected that the regulator is still determined to reduce incentives no later than the end of the year,
even though it tends to do so very carefully and smoothly. 

On Wall Street on Wednesday, stock indices were changed by 0.02-0.7% based
on the results of the Fed meeting and company reports.

According to the data, profits of 89% of the S&P 500 companies, which have already announced their results, exceeded analysts’ expectations.

The Federal Reserve keeps the interest rate unchanged

The Federal Reserve kept the interest rate on federal funds at 0-0.25% annually, in line with expectations.

the Board also said it would continue to buy back assets totaling $120 billion a month,
including $80 billion in US Treasury bonds and $40 billion in mortgage bonds, “pending significant progress towards employment targets and price stability.”

Fed Chairman Jerome Powell acknowledged that consumer prices are rising much faster this year than he and other Fed officials expected.

He said during a traditional press conference after the end of the July meeting of the U.S. Central Bank,
inflation is likely to be “higher and more stable than we expected.”

The Consumer Price Index (PCE), targeted by the Federal Reserve,
jumped 3.9% in May compared to the same month last year.

This was the highest increase in 13 years.

The Department of Commerce will release the June statements on Friday.


A new jump in oil prices and the Federal Reserve keeps interest rates unchanged

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