Oil Prices down amid Geo-Political Uncertainty

November 1, 2023

Global oil prices continued their recent decline on Wednesday, with investors maintaining a cautious stance ahead of the U.S. Federal Reserve (Fed) meeting and monitoring developments in the Israel-Hamas conflict. Brent crude is currently trading at $85.09 per barrel, showing a 0.17% decrease for the day, while West Texas Intermediate crude is at $80.85 per barrel, down by 0.26%.

This marks the third consecutive daily drop in oil prices, as geopolitical risks persist, which appear to be counterbalancing the record levels of oil production in the United States.

Recent data indicated that U.S. crude oil inventories increased by approximately 1.3 million barrels during the previous week, while fuel stockpiles decreased by around 360,000 barrels. Distillate inventories also fell by about 2.5 million barrels.

The Federal Reserve, which was set to conclude its meeting on Wednesday, was widely expected to maintain interest rates at their current levels, according to a poll conducted by CME’s Fedwatch tool. The direction of interest rates can significantly impact economic growth and oil demand, with rate hikes aimed at curbing inflation potentially slowing down economic activity and reducing oil consumption.

In Europe, October inflation in the Eurozone dropped to 2.9%, the lowest level in two years, as reported by a Eurostat flash reading. This decrease has led to expectations that the European Central Bank is unlikely to raise interest rates in the near future.

Additionally, Libya is preparing to export approximately 8.2 million barrels of Es Sider crude in November, equivalent to a daily loading rate of 273,000 barrels per day. This marks a slight increase compared to the revised loading rate of 265,000 barrels per day in October.