Crude oil suffers a decline following the start of the Federal Reserve’s policy meeting.
While the central bank has adamantly voiced out trust in its dovish monetary policy in the past weeks, experts noted that this might now be the case this time.
This assumption came after the country’s Consumer Confidence Index, which is a measure of inflation, jumped by 5.0% in the latest reading.
The result instantaneously alarmed spectators on the possibility that the boom in consumer prices might not as transitory as initially expected.
With this, policymakers are under big pressure to increase rates and turn hawkish at a faster than forecasted timeline to prevent the situation from worsening.
In the latest charts, the Brent crude declined by 42 cents to $73.97 per barrel. This is a correction from the previous session in which it managed to notch a multi-year high.
The West Texas Intermediate shed 0.53% to $71.77 a barrel. Commodity experts are impressed that the American benchmark managed to stay still above the $71.00 per barrel threshold despite the disconcerting uncertainty.
Earlier in the week, analysts from Goldman Sachs reiterated their $80.00 per barrel price target for the benchmarks amid the bettering global demand.
This projection is widely supported by the world’s biggest financial institutions, with some giving Brent a $100.00 per barrel hit target.
In a statement, market strategists noted that traders have invested so much of their attention in the outcome of the US-Iran nuclear talks.
Another factor that dominated headlines in the past days includes the increased demand outlook for the summer season in the United States.
Both situations clouded attention on the Federal Reserve, which has now become the new elephant in the room for energy commodities.
EIA Reports Draw
Meanwhile, EIA’s latest draw update is not supportive of crude prices at all.
The agency updated a 7.35 million barrel draw a week earlier which is higher than the 3.29 million that analysts forecasted.
This extends the draw streak recorded in the week earlier which the industry group updated a 5.24 million draw.
This latest update is in conjunction with the report that the American Petroleum Institute released earlier for the period ending June 11. The latter updated an 8.54 million barrel draw.
In a statement from OPEC, the oil organization noted that it is delighted with its decision of gradual ramping of production supply.
This comes as overall uncertainty continues to have a firm grip on the market.