Oil prices fall on restored Russian supply; traders eye Fed outlook
Investing.com-- Oil prices edged lower in Asian trading on Tuesday as supply worries eased following the resumption of activity at Russia’s key export hub, while investors remained cautious about the Federal Reserve’s rate outlook.
As of 21:06 ET (02:06 GMT), Brent Oil Futures expiring in January fell 0.6% to $63.83 per barrel, while West Texas Intermediate (WTI) crude futures also slipped 0.6% to $59.54 per barrel.
Loading operations at the Novorossiysk port on the Black Sea coast recommenced on Sunday, ending a two-day suspension triggered by a missile and drone attack attributed to Ukraine.
The interruption briefly cut about 2.2 million barrels per day of exports -- roughly 2% of global oil supply. With operations restored sooner than expected, some of the near-term supply premium faded and helped exert downward pressure on crude prices.
Meanwhile, longer-term supply risks remain under the spotlight. The U.S. Treasury reported that sanctions imposed on Russia’s oil majors Rosneft and Lukoil are already reducing Moscow’s oil revenues and are expected to curb export volumes over time.
The sanctions enshrine a deadline of November 21 for companies to wind down dealings with the firms, raising concern about future disruptions.
On the demand side, traders are also acutely focused on the Fed’s stance. Fed Governor Christopher Waller has argued that a weakening U.S. labour market justifies a rate cut at the December meeting, citing signs of stagnation in hiring and rising layoff discussions.
That dovish signal contrasts with other Fed officials and several regional presidents who recently advocated a more cautious approach given still-elevated inflation.
With the government shutdown having delayed key data -- including the September jobs report due Thursday -- uncertainty over policy timing is elevated.
Such policy uncertainty matters for oil markets because higher interest rates dampen economic growth, weigh on fuel demand, and tend to strengthen the U.S. dollar, making dollar-priced commodities like crude less attractive. In contrast, a rate cut would boost demand prospects, ease the dollar, and lift oil prices.
