Oil pulls back from weekly highs as investors await Fed rate cuts
Shafaq News/ Oil futures eased fromtheir highest levels in weeks as traders took profit while waiting for ameeting of the Federal Reserve later this week for indication of further ratecuts.
Falls were limited, however, byconcerns of supply disruptions in the event of more U.S. sanctions on majorsuppliers Russia and Iran.
Brent crude futures fell 21 cents,or 0.3%, to $74.28 a barrel by 0424 GMT after settling at their highest levelsince Nov. 22 on Friday.
U.S. West Texas Intermediate crudedropped 30 cents, or 0.4%, to $70.99 a barrel after reaching its highestsettlement level since Nov. 7 in the previous session.
"After last week's +6% rally,and with crude oil trading towards the top of recent range highs, we are likelyseeing some light profit-taking," IG market analyst Tony Sycamore said.
"Also it is likely a lot oftrading books at banks and funds shut up shop at the end of last week and havereduced appetite for positions over the festive season."
Oil prices were bolstered by newEuropean Union sanctions on Russian oil last week and expectations of tightersanctions on Iranian supply, he added.
U.S. Treasury Secretary Janet Yellentold Reuters on Friday that the U.S. is looking at further sanctions on"dark fleet" tankers and will not rule out sanctions on Chinese banksas it seeks to reduce Russia's oil revenue and access to foreign supplies tofuel its war in Ukraine.
Fresh U.S. sanctions on entitiestrading Iranian oil are already driving prices of the crude sold to China tothe highest in years. The incoming Trump administration is expected to ramp uppressure on Iran.
Oil prices were also supported bykey central bank interest rate cuts in Canada, Europe and Switzerland last weekand expectations the Fed will cut rates this week, Sycamore said.
The Fed is expected to cut interestrates by a quarter of a percentage point at its Dec. 17-18 meeting which willalso provide an updated look at how much further Fed officials think they willreduce rates in 2025 and perhaps into 2026.
Lower interest rates can boosteconomic growth and demand for oil.
Still, forecasts of ample supply in2025 by the International Energy Agency and CNPC's forecasts of oil demanddecline in China, the world's second-largest consumer, after consumption peakedin 2023 are factors that will continue to weigh on global oil markets.
(REUTERS)
