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Business News/ Markets / Commodities/  Oil prices pull back on delayed US Fed rate cuts, OPEC output hopes; Brent down 1% to $82/bbl
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Oil prices pull back on delayed US Fed rate cuts, OPEC output hopes; Brent down 1% to $82/bbl

Brent and WTI futures rose more than $1 a barrel in the previous session after Reuters reported that OPEC will consider extending voluntary oil output cuts into the second quarter.

FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia. REUTERS/Alexander Manzyuk/File Photo (REUTERS)Premium
FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia. REUTERS/Alexander Manzyuk/File Photo (REUTERS)

Oil prices pulled back on Wednesday, February 28, as the prospect of delays to US interest rate cuts and a jump in US crude stocks that beat expectations offset a boost from a potential extension to supply curbs by the Organization of Petroleum Exporting Countries (OPEC). Brent and WTI futures rose more than $1 a barrel in the previous session after Reuters reported that the OPEC and its allies will consider extending voluntary oil output cuts into the second quarter.

Brent crude futures fell 76 cents, or 0.91 per cent, to $82.89 a barrel. US West Texas Intermediate futures (WTI) were down 83 cents, or 1.05 per cent, at $78.04. Both benchmarks had fallen $1 in earlier trading, according to news agency Reuters. Last week, Brent crude declined about two per cent and WTI fell more than three per cent after a US central bank policymaker indicated interest rate cuts could be delayed by at least two more months.

Also Read: US sanctions threaten Russian oil sales to India; complicate process for OMCs to secure annual deals: Report

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a March 19 expiry, was last trading 0.52 per cent lower at 6,495 per bbl, having swung between 6,456 and 6,598 per bbl during the session, against a previous close of 6,514 per barrel.

What's weighing on oil prices?

-Analysts attributed the price falls to profit-taking plus a combined response to a surge in US crude stocks and continuing hopes of a Gaza ceasefire deal in coming days. American Petroleum Institute data showed that US crude stocks showed an 8.43 million barrel build in the week ended February 23 which beat street estimates.

-Federal Reserve Governor Michelle Bowman had signalled on Tuesday that she was in no rush to cut US interest rates, particularly given continuing inflation risks. Higher-for-longer rates could dampen economic growth and suppress demand for oil.

-The US economy grew at a robust 3.2 per cent annual pace from October through December, propelled by healthy consumer spending, the Commerce Department reported Wednesday in a slight downgrade from its initial estimate.

-The expansion in the nation's gross domestic product (GDP) — the economy's total output of goods and services — slipped from 4.9 per cent from July through September, according to US government data.

-The fourth-quarter GDP numbers were revised down from the 3.3 per cent pace Commerce initially reported last month. US growth has now topped two per cent for six straight quarters, defying fears that high interest rates would tip the world's largest economy into a recession.

-Russian authorities on Tuesday announced a six-month ban on gasoline exports from March 1 to compensate for rising demand from consumers and farmers and to allow for planned refinery maintenance.

Where are prices headed?

Crude oil exhibited significant volatility, extending its gains following new reports suggesting that OPEC+ might prolong its voluntary output cuts into the second quarter and potentially through the end of 2024. The surge in crude oil prices was further fueled by delays in the Israel-Hamas ceasefire deals, according to analysts.

‘’The disappointing US economic data released on Tuesday has put a limit on the gains of crude oil. Expectations are for crude oil prices to remain volatile in today's session. The support for crude oil stands at $77.50–76.90, with resistance at $78.90-79.60 in today's session. In INR, crude oil has support at Rs6,440-6,350 and resistance at 6,590-6,500,'' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Published: 28 Feb 2024, 09:53 PM IST
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