Oil prices hit their lowest level in 6 months

Oil prices hit their lowest level in 6 months

Oil prices in Asian trading continued to fall after dropping more than 3% in the last session. The decline was due to concerns about excess supply and demand.

Price action

At 0621 GMT, February Brent crude futures dropped 33 cents (0.45%) to $72.91 per barrel, while US West Texas Intermediate crude futures for January fell 29 cents (0.42%) to $68.32 per barrel.

The overnight market faltered due to stronger-than-expected US inflation readings for November, reinforcing the view that the Federal Reserve will not cut interest rates early next year. This, in turn, is expected to impact consumption.

ANZ analysts have reported that the weekly average of Russian crude exports has surged to its highest level since July. This has further intensified concerns about oversupply and cast doubts on the latest agreement reached by the Organization of the Petroleum Exporting Countries and its allies, also known as the OPEC+ alliance, to reduce production.

In its latest report on short-term energy expectations, the US Energy Information Administration increased its supply forecast for 2023 by 300,000 barrels per day to 12.93 million barrels per day compared to its previous report.

Oil prices declined for the seventh consecutive week, driven by expectations of further drops.

Tina Teng, a market analyst at CMC Markets, said that the outcome of the US central bank’s policy meeting, which concludes later today, will determine the direction of the markets.

“The expected tougher stance from the Federal Reserve may cause a further decline in crude oil prices,” she added.

The Federal Reserve is expected to maintain interest rates, with investors focusing on their views on the economy and future rates.