Oil closed lower as the market reacted to the Federal Reserve’s (Fed, the North American central bank’s) decision to keep interest rates unchanged, confirming investors’ expectations. Contracts maintained their downward trajectory early on after data showed some slowdown in China’s economy.
The decline in contracts ended up mitigating the positive performance in January, the first monthly increase since September due to concerns about the conflict in the Middle East.
WTI oil for March fell 2.53% (US$ 1.97), to US$ 75.85 per barrel, on the New York Mercantile Exchange (Nymex). Brent for April fell 1.40% (US$1.16), to US$81.71 per barrel. In January, the most liquid WTI and Brent contracts accumulated an increase of around 6%.
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Commodity prices fell early after factory activity in China contracted for the fourth consecutive month.
The downward movement also included data on oil stocks in the United States, which rose by 1.234 million barrels, the country’s Department of Energy (DoE) reported this Wednesday. Analysts consulted by FactSet expected a drop of 800 thousand barrels.
Among the notable news, Saudi Arabia gave up on its plans to expand production. The decision moved the oil market in a context of divided opinions about the long-term prospects.
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Julius Baer’s head of Economic and Next Generation Research, Norbert Rücker, said he is in the group that sees oil demand reaching its peak this decade. In addition to excess capacity, a change in trend carries risks of lasting cost pressures and geopolitical surprises. However, the oil market appears well balanced this year, in a context of a weak economy and growing production in America.
Regarding oil production, the executive director of the International Energy Agency (IEA), Fatih Birol, estimated that Brazil’s share of the global oil supply will jump to 4% in 2030 and remain at this level until 2040. Today , the country has a 3% share, said Birol in an interview in Brasília.
*With Dow Jones Newswires