Official minutes of the Feb 1st Federal Open Market Committee have been released, showing that a majority of Federal Reserve officials had agreed to slow the pace of interest rate hikes, though high inflation risks remained a serious consideration.
Released at 2 p.m. EST Wednesday, the official meeting minutes have been weighing on oil prices, as market anxiety rises over fears that the Fed might maintain higher interest rates than expected.
"Almost all participants agreed that it was appropriate to raise the target range of the federal funds rate 25 basis points," according to the official minutes from the January 31st-February 1st meeting.
The U.S. Federal Reserve's way of thinking has kept oil markets down in recent weeks as economic growth fears could hinder demand concerns.
For all of 2022, the U.S. Federal Reserve has been raising policy rates, which began at 0 in March 2022 and is now in a 4.5%-4.75% range.
The meeting minutes suggest that while there will be increases, with analysts taking this as an indication that we may have hit a rate that is close to acceptable to continue reducing inflation.
On Wednesday, oil prices were positioned for their sixth straight losing session.
WTI and Brent were losing nearly 3% as of 2:23 p.m. EST Wednesday, signaling that investors are still concerned that recent economic data coming out of the U.S. will prompt a more aggressive tone by the Fed in the near future. That economic data, coupled with further rate hikes, would put significant downward pressure on fuel demand.
"While better U.S. economic data should mean better oil demand, the concern is that this forces the Fed to overtighten monetary policy to bring inflation under control," UBS analyst Giovanni Staunovo was quoted by Reuters as saying.
WTI was trading down 3.03% at 2:28 p.m. EST, at $74.05 per barrel, while Brent crude was trading down 2.87%, at $80.67 per barrel.
By Charles Kennedy for Oilprice.com
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