Despite the improvement this Friday in Brent and WTI, the Fed’s signals caused the value of crude oil to decline.
The prices of Petroleum rose 1% this Friday, but failed to avoid a weekly loss, after strong US economic data reinforced expectations that the interest rates could remain high for a long time and dampen demand for fuel.
The crude oil contract Brent for July rose 76 cents, or 0.93%, to $82.12 a barrel, while the US West Texas Intermediate (WTI) rose 85 cents, or 1.11%, to $77.72, on expectations of better demand for summer travel starting this weekend in the northern hemisphere.
Both Brent and WTI lost more than 2% on the week. In fact, Brent had closed on Thursday at its lowest level since February 7 and US WTI futures at their lowest level since February 23.
The influence of the Fed minutes
The minutes of the most recent monetary policy meeting of the United States Federal Reserve (Fed), published on Wednesday, showed that monetary policymakers were questioning whether interest rates were high enough to control the persistent inflation.
Some officials were willing to raise the costs of indebtedness again if inflation picked up. The president of the Fed, Jerome Powell and other central bank officials have since stated that they consider it unlikely that there will be further increases.
“Several participants mentioned their willingness to tighten monetary policy further if the risks to the inflation are materialized in such a way that the measure is appropriate,” the minutes reported.
Higher interest rates increase the cost of borrowing, which can slow down the economic activity and curb the demand for Petroleum.
Source: Ambito
