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On May 9, Fed Chairman Williams said on Friday that uncertainty is high and will continue to exist for some time to come. "We are going through a moment of uncertainty and change," Williams said. "There is no doubt that uncertainty will continue to be the defining feature of the monetary policy landscape for the foreseeable future," Williams said. "This is a direct result of structural changes in the global economic environment, such as changes brought about by artificial intelligence, deglobalization, and innovation in the financial system." Williams did not comment on the economic outlook or monetary policy. He also said that the independence of the central bank can bring better results.May 9th, Federal Reserve officials responsible for implementing monetary policy said on Friday that the market responded well to market pressures last month as the Fed took steps to strengthen a key liquidity tool. "Although liquidity in the U.S. Treasury cash market became tight in early April, these markets continued to function normally, in part because of the resilience of funding liquidity in the U.S. Treasury repurchase market," said Roberto Perli, manager of the Federal Reserve Systems open market account. Markets performed well during this period of stress after the Trump administration announced large-scale trade tariffs, but Perry said the experience once again showed that it was necessary for the Federal Reserve to further explore how to provide rapid liquidity to the market. Perry said the Standing Repurchase Facility (SRF) will operate in the morning and afternoon in the "near future." He noted that "these early settlement auctions, combined with the current afternoon auctions, will increase the effectiveness of the SRF as a tool for monetary policy implementation and market operations."Market news: Hungary expelled two Ukrainian diplomats.Ukrainian President Zelensky: Ukraine will hold a meeting of leaders of the "Coalition of the Willing" on Saturday.New York Fed official: Markets and financing remained orderly during last months stress.

As The Dollar Rises, Oil Falls Despite Russian Supply Cuts

Skylar Williams

Feb 27, 2023 14:11

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Oil prices dipped in volatile trade on Monday, as a stronger dollar and concerns of recession risks offset gains from Russia's plans to deepen oil supply cuts.


At 04:11 GMT, West Texas Intermediate U.S. crude futures (WTI) were trading 23 cents or 0.3% lower at $76.09 per barrel, while Brent crude futures were down 30 cents or 0.36% at $82.86 per barrel.


Friday's closing prices for both indices were up by more than 90 cents.


Monday, the dollar hovered near a seven-week high after a slew of strong U.S. economic data bolstered the view that the Federal Reserve will need to raise interest rates further and for an extended period of time.


A strong dollar increases the cost of U.S. dollar-priced goods for foreign currency holders.


Vandana Hari, founder of oil market analysis firm Vanda (NASDAQ:VNDA) Insights, stated, "Crude continues to receive direction from the broader financial markets' sentiment."


Fears of a hawkish Federal Reserve returned to the forefront on Friday after the personal consumption expenditures (PCE) price index increased by 0.6% in January, following a 0.2% increase in December.


"Crude will undoubtedly face renewed pressure if risk aversion continues to grow," Hari predicted.


Last week, U.S. crude oil inventories reached their highest level since May 2021, according to data from the Energy Information Administration (EIA). This development added to the downward pressure on crude oil prices.


"The EIA data continue to generate more questions rather than provide clarity on markets," analysts at the consulting firm Energy Aspects wrote in a note, referring to the steep supply adjustment in the data that contributed to the increase.


On the supply side, Russia intends to reduce oil exports from its western ports by as much as 25% in March compared to February, exceeding its previously announced 5% production cut for the month.


Since February 24, 2022, when Russian military entered Ukraine for the first time, oil prices have decreased by approximately six percent annually.


Russia ceased oil deliveries to Poland via the Druzhba pipeline, the CEO of Polish refiner PKN Orlen said on Saturday, a day after Poland delivered its first Leopard tanks to Ukraine.


Two weeks after the invasion, oil prices soared to a record high of nearly $128 per barrel due to supply worries, but have since retreated due to fears of a global economic decline.


Separately, investors are awaiting this week's China manufacturing surveys to determine the direction of crude demand. This weekend marks the beginning of China's annual parliamentary session, during which new economic policy goals and guidelines will be introduced.


Ning Zhang, senior China economist at UBS Investment Bank, said in a note: "We anticipate the government to reiterate the importance of growth support and call for more policy support."


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