OP: A less hawkish Fed could jumpstart the oil price rally

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Oilprice.com‘s Alex Kimani writes:

– On Wednesday, Federal Reserve Chairman Jerome Powell announced the decision to leave the policy rate, federal funds rate, unchanged.

– Oil and many other commodities tend to have an inverse relationship with the dollar.

– Oil prices have not responded yet to the weakening dollar, but are likely to do so if this trend persists.

In recent times, fears of a spillover in the conflict between Israel and Hamas, which could embroil Iran and its allies in the region, have offered considerable support to oil prices. Unfortunately for the bulls, the oil price momentum has fizzled out with the war risk premium that helped fuel an oil price rally in the early days of the Israel-Hamas war all but gone thanks to Israel’s ground incursion into Gaza proving to be less extensive than some investors expected. 

But that’s just part of the picture, with no shortage of bearish catalysts in the oil markets. China’s economy continues sending mixed signals with recent reports of an unfolding debt crisis overshadowing earlier reports of robust demand for key commodities including oil, copper and iron ore. 

China is the world’s largest importer of oil. Second, the Biden administration has temporarily eased sanctions on Venezuela’s oil exports to help the country in efforts to conduct a fair presidential election next year, a move that analysts estimate could add as much as 200,000 bpd to oil markets…

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