Oil prices fell slightly in Asian trade on Thursday, coming under pressure from a stronger dollar after the Federal Reserve downplayed expectations for a December interest rate cut.
Caution before a hotly anticipated meeting between U.S. and Chinese heads of state also weighed, given that the meeting will set the precedent for trade relations between the two countries.
Strength in the dollar pressured oil markets on Thursday, after the Fed cut interest rates but warned that another cut in December appeared less likely. The greenback firmed sharply on Wednesday but saw mild declines in Asian trade.
Brent oil futures for December fell 0.2% to $64.81 a barrel, while West Texas Intermediate crude futures fell 0.3% to $60.31 a barrel by 21:18 ET (01:18 GMT).
Trump-Xi meeting eyed amid heightened trade tensions U.S. President Donald Trump and Chinese President Xi Jinping are set to meet in South Korea on Thursday, on the sidelines of the Asia-Pacific Economic Cooperation summit.
Their meeting is expected to help cool heightened trade tensions between the world’s largest economies, which were a major source of uncertainty for oil markets earlier in October.
Both Washington and Beijing were seen making some conciliatory moves ahead of the talks, spurring hopes that the two countries will agree to a broader trade deal and bring down heightened uncertainty over trade.
Oil pressured by strong dollar after Fed rate warning Oil prices were also pressured by an overnight spike in the dollar, with the greenback surging nearly 0.6% against a basket of currencies.
A stronger dollar pressures prices of commodities priced in the greenback. But the dollar did see some profit-taking on Thursday, falling about 0.2% in Asian trade.
The dollar soared after the Fed cut rates by 25 basis points as expected, but downplayed expectations for more rate cuts this year. Chair Jerome Powell cited heightened economic uncertainty caused by a prolonged government shutdown.
While Thursday’s cut was largely priced in, oil prices still gained after the move, given that lower rates tend to boost economic activity and oil demand.
But doubts over future easing limited oil’s gains. Crude prices were still trading lower for October, and were headed for a third straight month in red as concerns over a supply glut and weak demand battered long positions in recent months.
