Crude oil prices carry on with downward momentum sparked Wednesday by sentiments from the U.S. Federal Resource. In Europe, economists said there are signs of subdued growth. File photo by Monika Graff/UPI |
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NEW YORK, May 19 (UPI) -- Crude oil prices, turning lower following comments from the U.S. Federal Reserve Board, dropped further Thursday amid European concerns of subdued growth.
Minutes from the April meeting of the Federal Reserve Board found the U.S. economy was improving, largely along labor trends. Inflation, however, was below the Fed's long-term objective of 2 percent and, while consumer sentiment was high, growth in real personal consumption slowed during the first quarter.
Sentiments from the Fed boosted the value of the U.S. dollar late Wednesday, putting downward pressure on crude oil prices that are traded in the U.S. currency. In broad terms, the Fed said it would likely raise interest rates next month provided U.S. economic trends indicate growth in the second quarter.
Anthony Starkey, manager of energy analysis for Platts Analytics, said in an emailed report that, despite some indications of balance between supply and demand in the energy market, there are some economic dynamics that would suggest the recent momentum in oil prices could stall.
"Rate hikes typically suggest a stronger dollar, and a stronger dollar typically suggests headwinds for commodities," he said.
Crude oil prices continued the downward trajectory from Wednesday. The price for Brent crude oil dropped 1.8 percent to $48.04 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, lost 1.5 percent at the open in New York to start the day at $47.45 per barrel.
On Thursday, officials with the European Central Bank said there were indications that weakness may be spreading across economic sectors. Benoit Coeuré, an executive board member at the ECB, said the services sector was starting to see downturn spilling over from an already weak manufacturing sector. The global composite Purchasing Managers' Index, he said, was up on the short-term, but the first quarter average was lower than the fourth quarter reading.
"Global indicators continued to suggest subdued global growth," he said in a statement.
