ANKARA
Oil prices fell on Wednesday as renewed concerns over a slowing global economy and shifting monetary policy expectations reversed earlier optimism, initially fueled by US President Trump’s dismissal of recession risks and prospects of a US Federal Reserve rate cut, with fresh data altering the market outlook.
The international benchmark Brent crude decreased by 0.07%, trading at $69.57 per barrel at 10.57 a.m. local time (0757 GMT), down from $69.62 at the close of the previous session.
The US benchmark West Texas Intermediate fell by 0.03%, settling at $66.29 per barrel, compared to its prior session close of $66.31.
Analysts cite a cautious economic outlook, revised Fed policy expectations, and stabilized supply conditions as key drivers behind the recent drop in oil prices.
On Monday, Trump said: “There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America.” His comments suggested that the transitional phase would eventually benefit the economy and buoy oil demand.
However, renewed concerns that the US tariffs on key trading partners might dampen economic growth have overshadowed those initial reassurances.
Market players now worry that the adjustments could lead to a slower recovery, negatively impacting oil consumption in the world’s largest market.
Market expectations also shifted regarding the Fed. Initially, anticipation of a potential 25 basis point rate cut in June boosted market sentiment, as lower interest rates were expected to weaken the US dollar and increase oil demand.
Analysts suggest that the Fed may hold steady or even tighten policy to counter rising inflation thereby strengthening the dollar and reducing the attractiveness of oil investments.
The earlier impact of Ukraine’s drone attacks on Moscow, which had heightened fears over possible disruptions in global oil supply, has also dwindled.
Improved reassurances from Russian officials have alleviated concerns that the attacks could lead to significant supply interruptions.
Andriy Kovalenko, head of the Center for Countering Disinformation at Ukraine’s National Security and Defense Council, later indicated that while the drone activity was initially alarming, the likelihood of mass disruptions in oil refining or production has notably decreased.
