Oil Steadies Ahead Of Fed Decision

Oil prices were steady as global markets awaited a widely anticipated interest-rate cut by the Federal Reserve this week.

Oil has lost around 15% this quarter due to China’s economic slowdown and signs of ample supply.

Brent traded near $73 a barrel after a 1.6% rise on Monday, while West Texas Intermediate was above $70, according to a report by Yongchang Chin and Alex Longley for Bloomberg News.

Opinion remains split on the Fed’s path to easing, but some speculate the central bank will start with a half-point cut on Wednesday. Lower interest rates are expected to provide bullish support for energy demand.

Oil has lost around 15% this quarter due to China’s economic slowdown and signs of ample supply.

According to EA Quant Analytics, commodity trading advisers are close to their maximum short positions, which may ease selling pressure following the recent price drop.

“The market currently overemphasizes bearish drivers,” BNP Paribas analyst Aldo Spanjer wrote in a note.

He added that a correction may occur “towards the end of the year, when draws pick up again on returning refining capacity and year-end destocking in the U.S. begins, highlighting the issue of low stocks.”

In Europe, major refineries are cutting crude processing, adding to the bearish outlook, while a new mega refinery in Nigeria is ramping up operations, increasing competition.