NEW YORK: Oil prices fell about 1% to a one-week low on Wednesday (Sept 20) after the US Federal Reserve (Fed) left interest rates unchanged as widely expected, but stiffened its hawkish stance with a further rate increase projected by the end of the year.
Brent futures for November delivery fell 81 cents, or 0.9%, to settle at US$93.53 (RM438.23) a barrel, while US West Texas Intermediate crude (WTI) for October delivery fell 92 cents, or 1%, to settle at US$90.28 (RM423).
That was the lowest close for Brent since Sept 13.
The WTI contract for October expires on Wednesday. WTI crude futures for November, which will be the next front-month, was down about 82 cents to US$89.66.
Despite the price decline, Brent remained in technically overbought territory for a 14th straight day, which would be the longest streak since 2012.
Fed policymakers still see the central bank's benchmark overnight interest rate peaking this year in the 5.50%-5.75% range, just a quarter of a percentage point above the current range.
Interest rate increases to tame inflation can slow economic growth and reduce oil demand.
“A combo of further interest rate hikes, dollar strength and additional oil price increases will be upping the possibility of a recession,” analysts at energy advisory Ritterbusch and Associates said in a note.
Energy markets, meanwhile, had little reaction to US energy data showing crude inventories fell in line with expectations last week.
That crude stock draw was driven by strong oil exports, while petrol and diesel inventories drew down as refiners began annual autumn maintenance, the US Energy Information Administration said in a weekly report.
Crude inventories fell by 2.1 million barrels last week, compared with analysts' expectations in a Reuters poll for a 2.2-million-barrel drop.
US petrol futures slid to their lowest in two weeks, cutting the petrol crack spread, a measure of refining profit margins, to its lowest since December 2022. – Reuters