WASHINGTON (dpa-AFX) - Despite data showing an unexpected drop in crude oil inventories in the week ended March 15th, oil prices fell sharply on Wednesday, as traders chose to take some profits. A firm dollar weighed as well on oil prices.
The dollar index climbed to 104.15 earlier in the day, but retreated to 103.50 later on in the session after the Fed announced its monetary policy.
Data from the Energy Information Administration (EIA) showed crude inventories in the U.S. dropped by nearly 2 million barrels last week, as against expectations for a drop of 0.9 million barrels.
The EIA data also showed gasoline inventories slumped by 3.3 million barrels last week, while distiallate stockpiles edged up by 0.6 million barrels in the week.
West Texas Intermediate Crude oil futures for April ended lower by $1.79 or about 2.1% at $81.68 a barrel.
Brent crude futures were down $1.29 or 1.48% at $86.09 a barrel a little while ago.
The Federal Reserve today announced its widely expected decision to leave interest rates unchanged. However, the bank's forecasts suggests rate cuts are still likely later this year.
The Fed's accompanying statement acknowledged inflation has eased over the past year but reiterated officials do not expect it will be appropriate to lower rates until they have gained 'greater confidence' inflation is moving sustainably toward 2%.
The latest projections suggest Fed officials expect rates to be lowered to a range of 4.50 to 4.75% by the end of 2024.
Fed officials raised their forecast for rates at the end of 2025 to a range of 3.75 to 4% from the range of 3.50 to 3.75% forecast in December.
With regard to GDP growth, Fed officials have raised their growth forecast to 2.1% from 1.4% in December. The bank has raised core consumer price growth forecast to 2.6% from 2.4%.
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