Oil prices drifted lower in range-bound trading today as dealers looked for fresh direction after the US central bank signalled that it would keep its record-low benchmark interest rates on hold.
US benchmark West Texas Intermediate (WTI) crude for July delivery fell 10 cents to $60.35 in Asian trade, while Brent crude for August delivery eased 11 cents to $64.15 in late-morning deals.
“Prices continue on its sideways trend without much change to fundamentals,” said Daniel Ang, investment analyst at Phillip Futures in Singapore.
“Prices are showing heavy reluctance to deviate from $60 for WTI and $64 for Brent and this should continue into next week,” Ang said.
Fed's cautious approach
Oil prices rose modestly yesterday as dealers reacted to the US Federal Reserve’s decision the previous day to leave its key interest rate unchanged.
The world’s most powerful central bank said it would adopt a cautious and methodical approach to raising them later in the year.
Interest rate adjustments are closely watched by crude investors as an increase usually leads to a pick-up in the greenback, which makes dollar-priced oil more expensive for buyers using weaker currencies and so dents demand.
Oil output
Elsewhere, investors remain concerned that top producer and leader of the OPEC cartel Saudi Arabia could boost the output in an already over-supplied market, analysts said.
The kingdom’s oil minister, Ali al-Naimi, had yesterday said it is ready to pump more if demand rises, Bloomberg News reported.
It has 1.5 million to two million barrels a day of spare production capacity, al-Naimi said before a meeting with Russian Energy Minister Alexander Novak yesterday.
Investors have previously voiced concern over the OPEC cartel’s strategy of maintaining high production levels to squeeze US shale producers out of the market.