Oil markets experienced a shift from gains to losses as expectations of a March interest rate cut waned following Federal Reserve Chair Jerome Powell’s comments. While US crude futures remained relatively stable, treasuries declined, and the dollar strengthened, making commodities priced in the currency less attractive. Powell cautioned against premature rate cuts in a recent interview, overshadowing earlier price increases triggered by US attacks on Yemen’s Houthis and previous strikes on Iranian forces and militias in Syria and Iraq. The weekend assaults marked the most significant targeting of the Houthis since January 11, aiming to curb attacks on commercial ships in the Red Sea.
Crude prices had slumped the previous week, erasing most of the year’s gains, amid talks to pause the Israel-Hamas conflict, though US National Security Advisor Jake Sullivan indicated on Sunday that an agreement is not imminent. Earlier in the week, speculators had significantly increased bullish bets on the global Brent benchmark, raising the possibility that a reduction in these positions could have contributed to the market pullback.
In other developments, a substantial portion of refining capacity is expected to be offline following a fire at the Lukoil PJSC facility in Russia’s Volgograd over the weekend, attributed to a downed drone from Ukraine. Diesel futures surged by as much as 1.8% on Monday, marking the most significant increase in a week.
