Investors in the global financial markets took a very negative view of the US Fed meeting, outcome, which hiked the rate during the last two-day meeting, but changed its plans for 2019 towards easing. At the same time, the regulator reported that the situation in the American economy is stable; inflation is within the target range. However, many consider the Fed’s estimates too optimistic.
As a result, by the evening of Thursday, December 20, 2018, Asian indices closed mainly in the red, European – 1-2% lower, while the American stock exchanges went down by about 2.5%. Following stock markets, the negative spread to commodities – as of 22.19 Moscow time, the price of February North Sea Brent futures decreased by 5.08%, to $ 54.33 per barrel, the cost of February WTI futures – 4.67%, up to 45.92 dollars per barrel. However, on Friday, oil is slightly adjusted by 0.27%.
Now there are many other reasons for the recent fall in oil prices. These include doubts about the effectiveness of OPEC’s actions, concerns about the fall in global demand due to a slowdown in Chinese GDP growth, and increased activity by American producers. The risk of further price reduction is large enough, especially given the panic mood of investors, who continue to sell off security assets due to concerns about a slowdown in the global economy.
Nevertheless, at the last meeting, the Fed identified a much softer stance on tightening monetary policy, which was perceived by the players as a signal of worsening affairs in the United States and led to extremely cautious behavior regarding risky instruments. Oil was not saved even by a sharp drop in the USD value against the currencies of developing countries and verbal intervention by Saudi Arabia’s energy minister, who stated that there are no fundamental reasons for the decline in prices.
Due to the Christmas holidays, trade will be quite sluggish next week, so you should not expect a significant drop by the end of this year.