Oil prices fall after Fed decision, Trump-Xi meeting; OPEC+ eyed

Investing.com-- Oil prices fell Thursday as traders digested a meeting between the U.S. and Chinese heads of state as well as the Federal Reserve’s latest policy decision.

At 08:25 ET (12:25 GMT), Brent oil futures for December fell 0.7% to $63.86 a barrel and West Texas Intermediate crude futures dropped 0.7% to $60.06 a barrel.

Both benchmarks are on track for declines of more than 3% in October, which would be their third consecutive month of losses following concerns around oversupply.

Crude slips amid trade uncertainty 

U.S. President Donald Trump and Chinese President Xi Jinping met in South Korea earlier Thursday, on the sidelines of the Asia-Pacific Economic Cooperation summit.

Trump described the trade talks with the Chinese president as “amazing”, announcing that he had agreed to reduce tariffs on China to 47% from 57% in a one-year deal in exchange for Beijing resuming U.S. soybean purchases, keeping rare earths exports flowing and cracking down on the illicit trade of fentanyl.

However, the lack of concrete details on trade progress have made investors cautious about the certainty of a deal.

Investors see the announced agreement between China and the U.S. as more of a de-escalation of tension than a structural change in relationship, said PVM analyst Tamas Varga.

Hawkish Powell pressures oil 

Oil prices were also pressured by an overnight surge in the dollar, with the greenback gaining nearly 0.6% against a basket of currencies.

A stronger dollar pressures prices of commodities priced in the greenback. But the dollar did see some profit-taking on Thursday, falling about 0.2% in Asian trade. 

The dollar soared after the Fed cut rates by 25 basis points as expected, but downplayed expectations for more rate cuts this year. Chair Jerome Powell cited heightened economic uncertainty caused by a prolonged government shutdown. 

While Thursday’s cut was largely priced in, oil prices still gained after the move, given that lower rates tend to boost economic activity and oil demand. 

OPEC+ meeting looms large 

Investors are turning their attention to the weekend’s meeting of the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, where the alliance will likely announce another 137,000 barrels per day supply hike for December.

Ambar Warrick contributed to this article