Oil prices continued to fall for a second day as a smaller-than-expected decline in US crude (WTI) inventories strengthened technical resistance to a new rally.
The price of WTI fell below $90 a barrel and Brent below $93 after the Fed's decision last night to leave its key interest rate unchanged, signaling at the same time that one more increase will follow this year and that the cost borrowing will remain higher for a longer period of time. By 12.30:90 p.m., Brent was down 92,66 cents at $XNUMX.
Traders were selling riskier assets, with stocks also falling. "Prices fell as the Fed sent a tough message... The small fall in inventories and risks that the Fed's policy will remain restrictive for much longer than initially expected allow traders to lock in some profits," said an analyst at Oanda .
Rally over the last three weeks
Prices had previously rallied over the past three weeks due to lower oil supply from Saudi Arabia and Russia as well as more optimistic outlooks for the US and Chinese economies.
Crude has been signaling that it is technically overbought for several days, suggesting that the price's surge to 10-month highs was overdone. However, supply and demand indicators are reinforcing indications that market tightness is intensifying.
On the other hand, speculative hedge funds are pushing prices above $100, increasing their bets and fueling the rally. According to a report by the Financial Times, the latest figures show that the total net long position in Brent and WTI rose by 137.000 contracts, or 35% to an 18-month high of 527.000 contracts in the two weeks to September 12.