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Oil Dims Overshadowed By The Fed's Indecision
Oil Dims Overshadowed By The Fed's Indecision
Wednesday, 29 May 2024

Price Performance Indicators

Product

Previous Week

% Change

COFU

 $77.74

-1.81%

CPOTR

 Rp11,985

3.81%

WTI

 $77.72

-2.61%

BRENT

 $82.12

-1.90%

USD/IDR

 Rp16,024

0.29%

NG

 $2.52

-8.40%

  • In a week (5/20 - 5/24) the price of ICDX’s crude oil edged down 1.81%.   
  • The highest volatility reached 1.11 percent.     

***************************************************************

Market Review

The price of crude oil contracts traded on ICDX closed lower by 1.8% to below $78 per barrel. The main sentiment influencing oil price movements this week is still focused on US interest rate policy, the OPEC+ meeting in June, and geopolitical developments in the Middle East, especially the Gaza conflict.

The potential for lowering the US interest rate is increasingly dimming after at the Fed's policy meeting (22/5) policy makers saw that current inflation is still very high, so it will take longer for inflation to reach the 2% target before changing interest rate policy further. It is estimated that the Fed will keep interest rates stable until November. High interest rates increase borrowing costs, potentially hampering economic growth and also reducing fuel demand in the world's largest oil consumer.

Also weighing on price movements further, the Russian Ministry of Energy surprisingly released a statement (22/5) that Russian oil output in April had exceeded the production quota jointly agreed upon by OPEC and its allies for technical reasons. In the statement, the ministry source said Russia would continue to fulfill its commitments to the OPEC+ agreement and planned to provide compensation to cover its excess production. However, the statement released ahead of the OPEC+ meeting in June raised concerns that it would impact decisions taken by the producer alliance group.

Meanwhile, the International Court of Justice or World Court on Friday (24/5) ordered Israel to immediately stop its military attacks on the city of Rafah in southern Gaza. The order was approved by members of a panel of 15 international judges by a vote of 13-2, and was opposed only by judges from Uganda and Israel themselves. The attitude of the World Court also indicates increased international pressure which is expected to be able to stop further Israeli attacks on Gaza.


Market View

Oil Market Focused Awaiting Results of OPEC+ Meeting

OPEC and its allies (24/5) decided to postpone the policy meeting originally scheduled for June 1 to June 2 in Vienna online. During the meeting, the producer alliance plans to decide on the continuation of the policy of voluntary production cuts totaling around 2.2 million bpd which will end in June. Earlier in early May, three sources from OPEC+ said the alliance could extend the policy until the end of the year, if demand failed to increase. The decisions that will be taken by OPEC+ are usually used as an indication by actors to see the direction of the next movement in oil prices, because the total output of the alliance group represents around 40% of global oil output.


Iran's Interim President Agrees to Increase Production to 4 Million Bpd

Iran's interim president, Mohammad Mokhber, has approved a plan to increase the country's oil production from 3.6 million barrels per day to 4 million bpd, Tasnim news agency quoted (26/5). This news sparked concerns that it could influence decisions taken by OPEC+. Mohammad Mokhber took office as interim President of Iran on Monday (20/5), coinciding with President Ebrahim Raisi who was officially declared dead in a recent helicopter crash. Iran itself is the third largest OPEC producer after Saudi Arabia and Iraq.

Weekly Economic Data & Events Calendars

Date

Data/Events

Actual

Expectation

Previous

29-May

USA - API Crude Oil Stocks Change

 

N/A

2.480M

29-May

USA - API Gasoline Stocks Change

 

N/A

2.088M

30-May

USA - EIA Crude Oil Stocks Change

 

-2.000M

1.825M

30-May

USA - EIA Gasoline Stocks Change

 

N/A

-0.945M

1-Jun

USA - Baker Hughes Oil Rig Count

 

N/A

497

Source: ICDX Research

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© Indonesia Commodity & Derivatives Exchange (ICDX)
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