Oil falls after Federal Reserve leaves rate unchanged
YEREVAN, September 18. /ARKA/. Global oil futures fell Thursday, resuming their slide after a brief spike following the Federal Reserve's announcement that it would leave U.S. interest rates unchanged, Reuters reported on Friday.
Economists saw about a one-in-four chance of a rate increase. The dollar eased ahead of the announcement. A weaker U.S. currency can be supportive to dollar-denominated commodities like oil.
Both U.S. crude and Brent extended losses ahead of the 2 p.m. EDT announcement. After the decision was announced, U.S. crude darted into positive territory while Brent pared losses. Within 10 minutes, both benchmarks relinquished gains.
The CBOE oil volatility index fell ahead of the announcement but jumped nearly 15 percent in the minute after the decision. It traded more than 9 percent lower in the day by crude oil settlement.
Many in the market shrugged off the Fed's decision, saying traders will focus instead on other macro factors.
"The oil market will go back to watching to see if the economic slowdown in China spreads to other economies and whether low oil prices start to lower U.S. oil production significantly," Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, is quoted by Reuters.
Brent crude for November delivery fell 67 cents to settle at $49.08 a barrel. U.S. October crude fell 25 cents to settle at $46.90 a barrel. Brent's premium to U.S crude slid, and settled at $1.88 a barrel.
U.S. oil output has begun to ease after six years of sharp increases. Energy Information Administration data shows U.S. crude and condensate production peaked at 9.612 million barrels per day (bpd) in April and had declined by 316,000 bpd by June. ----0----
Economists saw about a one-in-four chance of a rate increase. The dollar eased ahead of the announcement. A weaker U.S. currency can be supportive to dollar-denominated commodities like oil.
Both U.S. crude and Brent extended losses ahead of the 2 p.m. EDT announcement. After the decision was announced, U.S. crude darted into positive territory while Brent pared losses. Within 10 minutes, both benchmarks relinquished gains.
The CBOE oil volatility index fell ahead of the announcement but jumped nearly 15 percent in the minute after the decision. It traded more than 9 percent lower in the day by crude oil settlement.
Many in the market shrugged off the Fed's decision, saying traders will focus instead on other macro factors.
"The oil market will go back to watching to see if the economic slowdown in China spreads to other economies and whether low oil prices start to lower U.S. oil production significantly," Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, is quoted by Reuters.
Brent crude for November delivery fell 67 cents to settle at $49.08 a barrel. U.S. October crude fell 25 cents to settle at $46.90 a barrel. Brent's premium to U.S crude slid, and settled at $1.88 a barrel.
U.S. oil output has begun to ease after six years of sharp increases. Energy Information Administration data shows U.S. crude and condensate production peaked at 9.612 million barrels per day (bpd) in April and had declined by 316,000 bpd by June. ----0----