Brent Remains Below $100 On Oversupply
Brent crude oil remained below $99 on Thursday morning after the dollar gained momentum on Wednesday following the Federal Reserve’s policy meeting.
The commodity traded at $98.88 at 10:40 GMT on Thursday as investors wondered whether OPEC would step in and cut supplies to boost prices above $100.
On Wednesday, the U.S. Federal Reserve gave investors some details about its plans for a rate increase but kept them guessing about when the rate hike would take place. The Wall Street Journal reported that the bank is planning to finish tapering its quantitative easing package in October but will keep rates low for a “considerable time."
While the exact timing of a rate hike is unknown, the bank did outline its plans for interest rates once they begin increasing. The bank surprised investors by detailing a scheme that increases interest rates much faster than anticipated. The news surprised investors but lent strength to the dollar, which in turn further weighed on Brent prices.
With crude prices struggling under the weight of a global supply glut and weakening demand, many are expecting OPEC to cut supplies in order to boost prices as most members of OPEC require prices to be above $100 in order to balance their budgets. Though some of the organization’s members have said they see the potential for a supply cut, others are unconcerned with the commodity’s recent losses and say that the long term outlook is positive.
Moving forward, investors are keeping an eye on Africa where the potential for supply interruptions is growing. In Nigeria, oil workers continued a strike, something that has the potential to disrupt the country’s exports if it does not end soon. In Libya, the El Sharara field experienced an outage, decreasing the nation’s production by 200,000 barrels per day.
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