Oil Prices Slip as Investors Await Economic Data and Fed Meeting
Caution Ahead of Fed Meeting and China Data
Oil prices declined by over 1% on Monday as investors exercised caution in anticipation of the upcoming U.S. Federal Reserve policy meeting and China’s manufacturing data. This cautious sentiment offset the support provided by tension in the Middle East.
Drop in Oil Futures
Oil futures experienced a drop of 1%, or 97 cents, reaching $89.51 a barrel by 0718 GMT. Similarly, U.S. West Texas Intermediate crude saw a decline of 1.3%, or $1.13, to reach $84.41 a barrel.
No Escalation in Hamas-Israel War
CMC Markets analyst Tina Teng stated that despite the escalation in the Hamas-Israel war, the widely expected ground invasion led to a retreat in oil prices. The weekend’s developments indicated that there would be no further expansion into a wider regional war.
Influence of the Middle East Conflict
Both Brent and WTI experienced a 3% increase on Friday due to Israel’s intensified ground incursions into Gaza. This raised concerns about the possibility of the conflict spreading in a region that contributes a significant portion to global oil production.
Focus on U.S. Fed Meeting and Economic Data
Investors are closely monitoring the U.S. Federal Reserve meeting scheduled for Wednesday, as well as U.S. jobs data and the earnings report from tech giant Apple Inc. These factors will provide insights into any potential economic slowdown that could impact fuel demand in the world’s leading oil consumer.
Anticipation of Central Bank Policies
While the Fed is expected to maintain interest rates, the policies of the central banks in Britain and Japan are also under review. These decisions will influence market sentiment and oil prices.
China’s Economic Data
This week, China will release its manufacturing and services PMIs for October. Investors are eagerly awaiting these figures for signs of stabilization in the world’s top crude importer’s economy and improvements in fuel demand as a result of Beijing’s supportive measures.
Impact of Middle East Developments
As developments in the Middle East continue to create uncertainty and volatility, Brent and WTI experienced a decline last week for the first time in three weeks. Vanda Insights founder Vandana Hari believes that crude oil appears overbought in light of the limited scope of the armed conflict between Israel and Gaza.
Ground Assault in Gaza
Reports from Palestinians in northern Gaza indicate intense air and artillery strikes as Israeli troops, supported by tanks, continue their ground assault. This has prompted further international calls to protect civilians.