Crude Oil Prices Fall Again As Markets Digest Fed Minutes
Oil prices finished lower again Wednesday following a choppy session while equities mostly gained as the markets digested Federal Reserve minutes signaling a policy change was coming but not imminent.
Minutes of the Fed’s policy meeting last month acknowledged that inflation had outpaced expectations and the central bank will need to be ready to pull back on its massive bond-buying program.
But the Fed did not provide clues on when the shift would happen, and as the stance was consistent with commentary from Fed Chair Jay Powell it did not jolt the market.
The Fed “is taking no chances anyone might read these minutes and think policy change is imminent,” said FHN Financial’s Chris Low.
The economy “is recovering faster than participants expected,” but there is not yet enough progress “to justify a policy change,” Low said.
Wall Street stocks finished modestly higher, with both the S&P 500 and Nasdaq edging to records.
European bourses also rose despite drops by many large banks as bond yields experienced more pressure amid diminishing worries over inflation.
Oil prices, meanwhile, finished lower again after protracted talks by OPEC+ producers were called off without an agreement.
“Investors have realized that there will be lots of uncertainty about the OPEC’s output policy in coming months and there is a small risk that the whole agreement could collapse, potentially leading to another price war,” said Fawad Razaqzada, an analyst at ThinkMarkets.com.
As was the case on Tuesday, oil prices rose early before changing course and plunging.
If the United Arab Emirates rejects the so-called OPEC+ agreement, it might provide markets with more oil than expected, driving prices even lower.
“In the coming months, the oil market rally was likely to reverse anyway. That process may have already started,” Razaqzada remarked.
New York – Dow: UP 0.3 percent at 34,681.79 (close)
New York – S&P 500: UP 0.3 percent at 4,358.13 (close)
New York – Nasdaq: UP less than 0.1 percent at 14,665.06 (close)
London – FTSE 100: UP 0.7 percent at 7,151.02 (close)
Frankfurt – DAX 30: UP 1.2 percent at 15,692.71 (close)
Paris – CAC 40: UP 0.3 percent at 6,527.72 (close)
EURO STOXX 50: UP 0.5 percent at 4,078.53 (close)
Hong Kong – Hang Seng Index: DOWN 0.4 percent at 27,960.62 (close)
Shanghai – Composite: UP 0.7 percent at 3,553.72 (close)
Euro/dollar: DOWN at 1.1797 from 1.1824 at 2100 GMT Tuesday
Pound/dollar: UP at $1.3802 from $1.3800
Euro/pound: DOWN at 85.44 pence from 85.67 pence
Dollar/yen: UNCHANGED at 110.63 yen
Brent North Sea crude: DOWN 1.5 percent at $73.43 per barrel
West Texas Intermediate: DOWN 1.6 percent at $72.20 per barrel