Oil prices were on track to post a small weekly loss early on Friday after the Fed signaled this week that interest rates could remain higher for longer, although it skipped a rate hike at its latest meeting.
In Asian trade on Friday, WTI Crude was up by 0.62% at $90.19 and Brent Crude rose by 0.44% to $93.74.
Both benchmarks were on track for a small weekly decline, following three weeks of weekly gains, in which prices had jumped by a total of 10% and hit the highest levels since November 2022.
Oil prices rose at the start of this week, buoyed by signs of tightening crude and fuel markets and additional draws in U.S. inventories, but the Fed put the brakes on the rally on Wednesday after signaling interest rates could be kept at higher levels for longer.
As widely expected, the Fed paused the interest rate hikes at its September meeting but signaled that with inflation remaining elevated despite a fairly strong economy there may be another rate hike later this year.
“Higher for longer was the key message” from the FOMC meeting, which has weighed on risk assets, including crude oil, ING strategists Warren Patterson and Ewa Manthey said on Thursday.
Even with the pause in hikes this month, the Fed sent a hawkish message.
Economic concerns in Europe could also weigh on oil prices in the near term, according to Tina Teng, market analyst at CMC Markets.
“Mounting fears of a recession in the Eurozone could continue pressuring oil prices,” Teng wrote on Thursday.
Profit-taking after the recent rally has also weighed down on oil prices this week.
However, on Thursday, oil prices got a boost from Russia’s decision to temporarily restrict exports of diesel and gasoline as Moscow aims to stabilize domestic fuel prices.
By Tsvetana Paraskova for Oilprice.com