Oil Prices Rise as Investors Await US Fed Meeting and Monitor Middle East Conflict
Oil prices increased by more than 1 percent on Wednesday as investors eagerly awaited the outcome of the U.S. Federal Reserve meeting for clues on interest rate policy. Meanwhile, the ongoing conflict in the Middle East continued to be a major focus.
Brent January crude futures rose by around 1.1 percent, or 90 cents, to reach $85.92 a barrel by 1042 GMT. U.S. West Texas Intermediate crude futures also gained 1.1 percent, or 90 cents, settling at $81.92 a barrel.
Edward Moya, an analyst at OANDA, commented, “Crude prices are steadying ahead of a key issuance update by the Treasury and FOMC rate decision,” referring to the Federal Open Market Committee, which determines the direction of U.S. monetary policy.
The Federal Reserve, concluding its meeting on Wednesday, is widely expected to maintain stable interest rates.
In the Eurozone, a flash reading from Eurostat revealed that October inflation reached its lowest level in two years, heightening expectations that the European Central Bank is unlikely to raise interest rates in the near future. The Bank of England is scheduled to meet on Thursday.
Interest rate hikes, implemented to control inflation, can hinder economic growth and dampen oil demand.
China, the world’s largest oil importer, experienced an unexpected contraction in factory activity during October, according to a private survey released on Wednesday. This news followed downbeat official figures from the previous day, raising concerns about the country’s fragile economic recovery.
Mr. Moya further stated, “Geopolitical risks remain and that seems to be offsetting some of the record production levels that are coming from the U.S.”
In Gaza, Egyptian media reported on Wednesday that the first group of injured individuals had been evacuated to Egypt, amidst the ongoing battle between Israeli forces and Hamas terrorists.
State media reported that Iran’s Supreme Leader Ayatollah Ali Khamenei called on Muslim states to halt oil and food exports to Israel, demanding an immediate end to Israel’s bombardment of the Gaza Strip.
With oil prices influenced by a combination of economic factors and geopolitical tensions, investors will closely monitor the outcomes of both the Federal Reserve meeting and the Middle East conflict for potential impacts on global oil markets.
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