2-Minute Explainer on Oil Price Factors, Interest Rate Predictions

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It’s the end of the week, and maybe it’s time to do a News Review!

Interest Rates On Hold

The Federal Reserve, European Central Bank, and the Bank of England all kept their rates on hold.

US: The Fed indicated the possibility of three rate cuts in 2024. Inflation is easing and economic growth is slowing relative to the pace seen in the third quarter.
ECB: Unlike the Fed, there are no discussions of rate cuts.
BoE: Also, deviating from the Fed, inflation is said to be still “skewed to the upside”. Cutting is currently not seen to be an option.

Japan is expected to end their negative interest rates scheme sometime soon, possibly in January.

There are several factors to consider.

China: China is the world’s largest importer of crude oil. The country is planning on implementing fiscal policy that will lead to decreased imports.
US Production: US producers have broken the annual oil production record.
Libya, Russia: Both expressed a desire to increase output (against OPEC wishes). While Russia is still dealing with many sanctions, it’s been established that price caps have largely failed due to lax monitoring and enforcement.

Globally, there are weaker-than-expected manufacturing numbers, signalling less energy demand.

The last business post was on the key factors related to US and China trade. Check it out here.