Crude oil prices drop by over 1.5% amid Federal Reserve’s stance on interest rates

By:
on May 21, 2024
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  • Fed Vice Chair for Supervision Michael Barr labeled the first quarter's inflation figures as "disappointing."
  • Contrasting views were presented by Fed Vice Chair Philip Jefferson, who found the April data "encouraging."
  • rent crude for July deliveries fell by 1.56%, trading at $82.49 per barrel at 7:32 am ET.

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Crude oil prices experienced a significant drop of more than 1.5% on Tuesday as the United States Federal Reserve provided no clear indications regarding potential interest rate cuts.

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The uncertainty stems from recent statements by key Fed officials, reflecting differing views on the economic outlook and inflation trends.

Federal Reserve officials’ mixed signals

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Federal Reserve Bank of San Francisco President Mary Daly stated that there is “no urgency” to start easing interest rates, citing the absence of evidence for a sustained drop in inflation.

Similarly, Fed Vice Chair for Supervision Michael Barr labeled the first quarter’s inflation figures as “disappointing.”

However, contrasting views were presented by Fed Vice Chair Philip Jefferson, who found the April data “encouraging.”

These mixed signals from the Federal Reserve have left markets uncertain about the future direction of monetary policy, contributing to the decline in crude oil prices.

Impact on crude oil prices

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As a result of the Federal Reserve’s stance, West Texas Intermediate (WTI) for July settlements dropped by 1.64%, reaching $78.06 per barrel at 7:29 am ET.

Similarly, Brent crude for July deliveries fell by 1.56%, trading at $82.49 per barrel at 7:32 am ET.

The decline in oil prices reflects market concerns over potential delays in economic recovery and continued inflationary pressures.

Investors remain cautious, awaiting more definitive signals from the Federal Reserve regarding future interest rate policies.

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