Crude oil dropped 0.10% on Thursday, bringing its cumulative dip this week to about 4.7%. The markets are likely to experience further movements in the US after the Federal Reserve Bank published the FOMC minutes.
But even with a series of slides, Crude has been on a recovery path (somewhat) after managing to sustain very sharp dips on Tuesday. On Wednesday during North American session, West Texas Intermediate crude oil futures traded at a lower price of $55.62, dropping 0.79% or $0.97, but closed on Thursday at $58.27.
Reports of large inventory surplus
Being a key determinant of supply and demand pressures on crude, most markets have been keen on the US’s crude inventory reports. The American Petroleum Institute (API) earlier last week projected a crude buildup of 5.94 million barrels for the week ending Nov. 14, trashing an earlier estimate of 1.54 million barrels.
The Energy Information Administration (EIA) released its weekly report on Wednesday with a new forecast of 2.2 million. The additional surplus is expected to hurt Crude prices even further.
All eyes on Federal Reserve Bank
The Federal Reserve bank will be releasing its minutes from a critical October meeting, when they decided to lower the Fed interest rate to 1.75%, making it the third successive time the policymakers slashed interest rates.
However, the third interest rate cut that took place in October has been seen as “hawkish” by many investors, as the Reserve Bank notified stakeholders that it would be taking a break from slashing interest rates.
A part of the Fed’s statement explained that the economy was generally “in a good place”, but still, it cautioned that “uncertainties about the outlook remain”.
The minutes from the last meeting are expected to provide further guidance to the market as future rate cuts could impact oil prices. Analysts say the minutes should basically be treated as the ultimate market-movers.
After a rough past week characterized by sharp slides, Crude has had small gains here and there to settle yesterday at $58.72. But while the fluctuations are expected to persist as more inventory surplus is reported, there will be occasional spikes every now and then.