Investing
Oil falls on demand concerns after Fed signals slower easing ahead
Global Banking & Finance Review®
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By Colleen Howe
BEIJING (Reuters) – Oil prices fell in early trading on Thursday after the U.S. Federal Reserve signalled that it would slow the pace of interest rate cuts in 2025, potentially impacting fuel demand.
Brent futures fell 33 cents, or 0.45%, to $73.06 a barrel by 0107 GMT. U.S. West Texas Intermediate crude fell 36 cents, or 0.51%, to $70.22.
The falls reverse much of the gains from Wednesday, when prices settled higher as U.S. crude stocks fell and the U.S. Federal Reserve cut interest rates by an expected 25 basis points as expected. But those gains were capped after the central bank later offered a more hawkish view on the outlook for 2025, which continues to weigh on market sentiment.
During the December 17-18 policy meeting, central bankers projected they would make just two quarter-percentage-point rate reductions in the coming year due to stubbornly high inflation, half a point less than they had anticipated as of September.
Lower rates decrease borrowing costs, which can boost economic growth and demand for oil.
U.S. crude stocks and distillate inventories fell while gasoline inventories rose in the week ending Dec. 13, the Energy Information Administration said on Wednesday.
Crude inventories fell by 934,000 barrels in the week to 421 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a 1.6 million-barrel draw.
The U.S. Environmental Protection Agency approved California’s landmark plan to ban the sale of gasoline-only vehicles by 2035 and require at least 80% of new vehicles to be fully electric by then. California’s rules have been adopted by 11 other states, including New York, Massachusetts and Oregon.
(Reporting by Colleen Howe; Editing by Muralikumar Anantharaman)
Brent crude oil is a major trading classification of crude oil originating from the North Sea. It serves as a benchmark for pricing oil globally and is used to price two-thirds of the world's crude oil supplies.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They are influenced by central banks and affect economic activity, including consumer spending and investment.
Fuel demand refers to the quantity of fuel that consumers and industries are willing to purchase at a given price. It is influenced by factors such as economic growth, energy prices, and consumer behavior.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI).
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