(Bloomberg) -- Oil held within its recent range as expectations for fewer interest-rate cuts by the Federal Reserve next year boosted the dollar.
Brent crude was little changed near $73 a barrel, paring a small earlier decline. Fed officials lowered borrowing costs as expected on Wednesday, but reined in the number of reductions they expect to make in 2025. The dollar rallied to its strongest level in more than two years, making commodities priced in the currency less appealing.
There was also fresh pessimism about China’s transport fuel needs. The country’s biggest oil refinery said gasoline demand in the world’s biggest importer has likely peaked, although it added that strong consumption growth for petrochemicals is likely to continue.
Crude rose on Wednesday after US nationwide inventories fell for a fourth week. Prices have been stuck in a fairly narrow range since the middle of October, with traders weighing a lackluster Chinese demand outlook and surging production from outside OPEC+ against geopolitical risks and the chance President-elect Donald Trump will move to restrict Iranian supply.
“While the Fed lowered borrowing costs as anticipated, it signaled a more cautious approach to rate reductions in 2025,” SEB analyst Ole Hvalbye wrote in a note. “This pushed the US dollar to its strongest level in over two years, raising the cost of commodities priced in dollars.”
The relative calm means crude futures are set for the narrowest annual price range since 2019, marking an abrupt halt to years of bumper swings following the global pandemic and the wars in Ukraine and the Middle East.
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