Oil is cheapening fast on Thursday morning after declining the day before. Investors are evaluating signals about increase of fuel reserves in the USA and statements of representatives of the Federal Reserve.
The cost of March futures on the Brent crude at London’s ICE Futures Exchange stood at $83.83 per barrel by 7:16 a.m., down $1.15 (1.35%) from the close of the previous session. At the close of trading on Wednesday those contracts fell by $0.94 (1.1%) to $84.98 per barrel.
The price of WTI futures for February at the electronic trading on the New York Mercantile Exchange (NYMEX) is $78.2 per barrel by that time, which is $1.28 (1.61%) lower than at the end of the previous session. The contract fell by $0.7 (0.9%) to $79.48 per barrel at the end of last session.
The day before oil had had a volatile session: during the trading quotations reached new highs since early December, but then went down on statements of James Ballard, head of Federal Reserve Bank of St. Louis.
Ballard told The Wall Street Journal that the U.S. central bank should continue raising the benchmark interest rate in order to get inflationary pressures down, despite recent statistical data pointing to a slowing economy.
“Such words have heightened fears that the Fed could raise the rate again by 50 basis points at its next meeting,” said Phil Flynn, senior market analyst at The Price Futures Group.
Moreover, the American Petroleum Institute (API) data, released Thursday night, showed a 7.6 million-barrel increase in U.S. oil inventories last week. A week earlier, reserves rose 14.87 million barrels.
The official report of the U.S. Department of Energy will be released Thursday at 6:00 p.m., a day later than usual due to the Martin Luther King Day holiday on Monday. Analysts polled by WSJ forecast that oil reserves fell by 1.1 million barrels for the week ended Jan. 13. The survey was conducted before the API data was released.
