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Oil falls on Saudi reassuring remarks; focus on Fed decision

Oil falls on Saudi reassuring  remarks; focus on Fed decision

Mubasher: Oil prices eased on Wednesday as Saudi Arabia announced that crude production would be resumed to the full by month-end, Reuters reported.

This came as financial markets hung on tenterhooks over an expected interest rate cut by the US Federal Reserve, remaining within tight ranges.

By 8:02 am GMT, global benchmark Brent futures fell by 0.26% at $ 64.36 per barrel (pb), giving up around 65% of their gains after the weekend attacks on Saudi oil installations, while US Nymex crude futures dropped by 0.59% at $58.99 pb, after paring nearly half of its gains on the incident.

Saudi Energy Minister Prince Abdulaziz bin Salman on Tuesday stated that the kingdom would restore its hit oil output by month-end, having resumed supplies to customers to the levels preceding the weekend attacks.

“I would think a spike in oil prices will likely prove to be short-term given that the global economy isn’t doing too well,” Asset Management One bond fund manager Akira Takei was quoted by Reuters.

That said, geopolitical tensions still lent support to oil as well as safe-haven assets such as US bonds. The 10-year US Treasury yield dropped to 1.799%, easing from Friday one-month-and-half peak of 1.908% ahead of the Fed’s policy decision due later in the day.

The US believed that the attacks on the Saudi Aramco's oil processing facility at Abqaiq and the nearby Khurais oilfield originated from southwestern Iran, which could up the ante between Tehran and Riyadh.

On the front of stock markets, European shares are set to tread water, with the pan-European Euro Stoxx 50 futures losing 0.06%, German DAX futures shedding 0.1% and London’s FTSE futures declining by 0.14%.

In Asia Pacific region, MSCI’s broadest index inched up by 0.14%, while Japan’s Nikkei fell by 0.18%, snapping 10-day gaining streak, and China’s blue-chip stock index climbed by 0.52%.

Wall Street shares posted marginal gain on Tuesday, with the S&P 500 rising by 0.26%.