Dollar to Naira News

Oil Prices Drop Despite Rekindled Rate Cut Hopes – Oil Price

By Irina Slav

Crude oil prices inched lower earlier today on disappointing Chinese data, despite an injection of bullishness from Fed chairman Jerome Powell, who signaled the U.S. central bank was warming up to the idea of interest rate cuts.

China released its latest CPI data today, showing a smaller-than-expected price increase and fueling concern about the strength of consumer demand in the world’s largest oil importer.

On the other hand, oil prices benefited from the American Petroleum Institute’s latest inventory estimate, which showed declines in both crude and fuel stocks. That reversed a three-day string of losses for the benchmarks.

During a testimony before the U.S. Senate Banking Committee Powell said that the U.S. economy was no longer “overheated” and that “The labor market appears to be fully back in balance.” He noted that “We are well aware that we now face two-sided risks,” saying that the Fed was not going to rush the rate cuts.

The Fed is facing pressure from Democrat legislators to hurry up the rate cuts before the November 5 elections but Republicans are applying counter pressure, focusing on the pain that inflation is causing households.

The overall impression appears to be that the Fed is an inch closer to cutting rates but still has a lot of inches to go to reach that decision. This suggests the bullish effect on oil prices would be transitory, at risk of fizzling out the moment somewhat negative economic data is released.

“Powell’s remarks to the Senate affirmed the improvement in data through the June quarter, while maintaining that more good data would boost confidence in the inflation outlook,” ANZ analysts said in a note following the testimony, as quoted by Reuters.

ING’s top commodity strategist Warren Patterson meanwhile noted that Powell’s remarks did not really deviate from a previously charted rate cut course that saw the possibility of a cut no earlier than September. Patterson added that “Concerns over Chinese oil demand have been growing recently and the latest inflation data will do little to ease these concerns, with it coming in weaker-than-expected.”

See Dollar to Naira black market today, Pound to Naira, Euro to Naira, Dollar to Naira CBN rate and Dollar to Naira Bank rate today.

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