Firmer-Than-Expected U.S. Inflation Readings Impact Market
The market stumbled during overnight trade due to stronger-than-anticipated U.S. inflation figures for November. This development led to the belief that the Federal Reserve would not be inclined to lower interest rates in the early part of next year, ultimately affecting consumption. Analysts from ANZ pointed out that oversupply concerns were exacerbated by the weekly average of Russian crude exports, which experienced the highest levels since July. Consequently, doubts were cast over the efficacy of the recent output cut agreement made by the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.
Increased Supply Forecast by U.S. Energy Information Administration
In its most recent Short-Term Energy Outlook report, the U.S. Energy Information Administration revised its supply forecast for 2023, raising it by 300,000 barrels per day to 12.93 million barrels per day. This bearish sentiment in the outlook suggests that oil is likely to continue its descent for the week, marking a continuation of the seven consecutive weeks of declines.
Fed Policy Meeting and Market Direction
Tina Teng, a market analyst with CMC Markets (LON:CMCX), stated that the outcome of the U.S. central bank’s policy meeting, which concludes later on Wednesday, will heavily impact market direction. Market participants will pay close attention to the views expressed by Fed officials concerning the economy and their expectations for future interest rates.
The United Nations passed a resolution on Wednesday, urging an immediate ceasefire in Gaza. President Joe Biden expressed concern that Israel was beginning to lose international support due to civilian casualties.
COP28, currently in its final hours of negotiations, centers on discussions among governments regarding the future of oil and other fossil fuels.