20.08.202111:04 Forex Analysis & Reviews: Oil slumps on latest Fed protocol

The Federal Reserve recently released the minutes of its July meeting, and it generally said that the volume of bond purchases may be reduced over the next assemblies. Such statements damaged commodities, including oil, which consequently dropped in price after the release of the protocol.

For example, West Texas Intermediate (WTI) futures fell another 3.7% yesterday, continuing the downtrend that has been going on since last week. It slumped due to the highly contagious Delta strain, as well as on the unexpected surge in US gasoline inventories.

The continual COVID-19 outbreaks inevitably constrain the oil sector, and the recent dollar gains slowed prices down, making goods priced in US currencies more expensive. But OPEC insists on a gradual recovery in supplies, so it is likely that oil prices will rise again in the future.

And for quite a long time already, the Fed has been buying bonds worth $ 120 billion every month to help the US economy recover. But the latest protocol indicated that members are starting to consider reducing it.

Howie Lee from OCBC Bank said markets are already fragile, so such statements from the central bank explicitly shook them.