Oil closes lower for second session, Brent holds above $93

Oil drilling rigs

Oil prices closed lower for the second session today, Sept. 20, amid demand concerns in light of expectations of continued tightening of monetary policy by the US Federal Reserve. The Federal Reserve left interest rates unchanged at their highest level since 2001. In its two-day meeting, the Federal Open Market Committee (FOMC) maintained policy rates at the current range of 5.25%-5.50%.

Analysts expect another increase during the current year, and further monetary policy tightening during 2024—higher than previous quarterly expectations. The FOMC officials raised 2023 real GDP growth forecast to 2.1% from the previous 1.0% in June.

Meanwhile, the Asian Development Bank reduced its growth expectations for the region at the end of this year to 4.7% instead of its previous growth estimate of 4.8%, in light of the rise in interest rates and the faltering Chinese real estate sector. Data from the Energy Information Administration revealed US crude oil inventories declined by 2.14 million barrels in the week ended Sept. 15. Earlier estimates had indicated a decline of 2.2 million barrels. Goldman Sachs pushed up its 12-month forecast for Brent crude to $100 from $93 as demand booms amid OPEC+ supply curbs, according to a Bloomberg report.

Brent crude futures for November delivery fell 0.85%, or 81 cents, to close at $93.53 a barrel.

WTI crude for November delivery declined 0.9%, or 82 cents, to record $89.66 per barrel.