Oil prices down amid low demand outlook, Fed decision to keep policy rate constant

ANKARA

Oil prices decreased on Friday over growing demand concerns in the US, the world's largest oil-consuming country, the US Federal Reserve's (Fed) decision to keep its policy rate unchanged and cease-fire talks in the Middle East.

International benchmark Brent crude traded at $82.44 per barrel at 10.43 a.m. local time (0743 GMT), a fall of 0.37% from the closing price of $82.75 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $78.19 per barrel at the same time, a 0.55% drop from the previous session that closed at $78.62 per barrel.

The Fed’s decision to maintain its hawkish stance in the face of slower inflation led to a strong risk perception, which in turn led to lower oil prices.

The bank announced that it would not change its policy rate in line with expectations but would keep rates constant in the range between 5.25% and 5.50%.

This decision supported a stronger US dollar against other currencies, dulling oil demand and supporting price declines.

The US dollar index, which measures the US dollar's value against other currencies, rose by 0.24% to 105.44 at 10.17 a.m. local time (0717 GMT).

Despite the summer period when oil demand is typically high, data indicating an increase in US crude oil inventories last week raised demand concerns.

The Energy Information Administration (EIA) announced an 0.8% increase, equivalent to 3.7 million barrels, in US commercial crude oil inventories during the week ending June 7.

Additionally, efforts to implement a cease-fire in the Middle East, home to the vast majority of global oil reserves, continue to impact oil prices.

Speaking on Thursday, President Joe Biden stated that the US would keep pushing for a cease-fire that he had declared for the fighting that has claimed the lives of over 37,000 people in the Gaza Strip.

Biden confirmed that leaders at the G7 summit in Italy had discussed the cease-fire but conceded that he was not confident but was hopeful that one would be reached.