Oil eases ahead of a crowded week for central banks
· BehindLines newsroom
Oil prices fell in Asian trading on Monday 26 October after a week of sharp gains. According to a Reuters report published by Business Recorder, Brent crude was down $2.21, or 1.89%, at $114.51 a barrel at around 04:26 GMT, while US West Texas Intermediate lost $2.23 to $101.04. On Friday, CNBC reports, Brent had settled at $116.72, its highest close since April, and WTI at $103.27.
The pullback is driven first by diplomacy. Qatari mediators travelled to Tehran on Sunday in an effort to ease regional tensions, in coordination with the United States, according to an official quoted by Reuters. Supply risks have not gone away, however: Iran-backed Houthi forces said they struck an airport and oil facilities in Saudi Arabia on Saturday, and Riyadh said on Sunday it had intercepted further missiles and drones. Analyst Vandana Hari of Vanda Insights expects price swings to persist, with risks tilted to the upside.
The week is a busy one for monetary policy. The US Federal Reserve announces its decision on Wednesday, the European Central Bank on Thursday and the Bank of Japan on Friday. All three are expected to leave rates unchanged, Reuters reports via MarketScreener, while markets are weighing possible hikes from the Bank of Canada and the Reserve Bank of New Zealand. In the United States, fed funds futures put the chance of a hold in the 3.75% to 4% range at about 90%, but Bank of America expects a quarter-point increase, according to CNBC.
In currency markets, the dollar index hovered around 101.6, the yen near 156.9 per dollar and the euro close to $1.122. Lower oil and falling US Treasury yields were weighing on the greenback. On Wall Street, futures rose on Sunday evening after a down week for the S&P 500, which ended Friday at 7,623.68. Around 44% of the index's companies report earnings this week, including Microsoft, Alphabet and Amazon.
For households and businesses, the stakes are tangible: a barrel that stays above $100 makes fuel and transport more expensive, and can encourage central banks to keep rates high. The signals their leaders send this week will matter as much as the decisions themselves, according to analysts quoted by Reuters.