Oil prices fell on Thursday after Brent Oil touched a seven-year high above $90 per barrel, as the market weighed concerns about low global supply against expectations that the US Federal Reserve will tighten monetary policy shortly.
By 1:17 p.m. EST (1817 GMT), benchmark Brent had down 15 cents to $89.81 a barrel, while U.S. crude had dropped 20 cents to $87.15 a barrel in a tumultuous day that saw both futures swing between positive and negative territory.Prices surged on Wednesday as a result of tensions between Russia and the West, with Brent breaking above the $90 barrier for the first time in seven years. The United Arab Emirates has been threatened by Yemen’s Houthi movement, which has added to Oil market concerns.
Russia said on Thursday that it was evident that the US was unwilling to address Moscow’s primary security concerns in the Ukraine conflict, but that the door to discussion remained open.The US Federal Reserve indicated on Wednesday that it expects to raise interest rates in March and halt its bond purchases that month, putting downward pressure on prices.Following the news, the value of the US dollar increased, making Oil more costly for customers using foreign currencies.
“The Ukraine issue is preventing a more significant price drop,” Commerzbank stated following the morning price drop. “There are still fears that Russian Oil and gas supply may be impeded in the case of a military escalation.”The market is beginning to focus on an OPEC+ meeting on February 2nd, which will bring together the OPEC (Organization of Petroleum Exporting Countries) and allies led by Russia.