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European stocks retreated from the successive gains as the market focused on the probable interest rate of the Federal Reserve, and as the skid oil prices haunted the energy sector.

During the session earlier, FTSE lost 0.04 percent to trade 6846.53 while DAX was down by 0.21 percent top 10669.20. CAC slumped 0.16 percent to 4460.90 while IBEX 35 Index advanced 0.04 percent to $8669.00. Adding to this, the pan-European STOXX slid 0.31 percent during European morning trade.

In London, shares of Smith and Nephew fell 1.64 percent after the recent offloading of $250 million for its gynecology business and the buyback worth $300 million. Also, Royal Dutch Shell plummeted 1.00 percent and British Petroleum declined 0.46 percent.

On the other hand, Italy’s ENI was down 0.37 percent and Total SA declined 0.93 percent. Statoil dropped 2.56 percent, while OMV AG slid 1.21 percent after announcing the intention to cut costs and investments.

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Oil Price Plummets

As speculations arose that OPEC may convince again the major oil kingpins to reconsider production freeze at their meeting in September, oil futures declined dramatically at the start of the session.

U.S. West Texas Intermediate crude oil futures dropped $64 cents to $42.13 per barrel while International benchmark Brent crude futures lost 63 cents to $44.35 per barrel.

Oil futures has been trading lower from the previous sessions as the oil market is kept flooded sue to oversupply. Investors seemed lost appetite in the commodity as the oil authorities failed to address the glut concern for the last few months.

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Iran, one of the major oil producers, has stayed firm on its stand not to cut output despite the current situation of the commodity in the market. According to the country’s Deputy Oil Minister Amir Hossein Zamaninia, Iran has not recovered the levels since the sanction was lifted. In July, the country produced 3.6 million barrels per day, adding to the supply glut in the market.

Oil analysts from BMI Research concluded “Renewed attempts at verbal intervention by OPEC will help bolster oil market sentiment, although the group will struggle to rebuild its role as a backstop to Brent.”

Ahead of the meeting, the U.S. Energy information Administration adjusted their forecast for the U.S. oil output from 820,000 barrels per day decline to 700,000 bpd. The oil industry has produced more than the call of demand.

Meanwhile, RBOB Gasoline and Natural Gas at the New York Mercantile Exchange gained 0.49 percent and 0.34 percent respectively.

Fed Rate Hike Outlook

Investors have been waiting for the monetary policy decision of the Fed after the upbeat non-farm payroll data. The expectation for a rate hike emerged as the better-than-expected job gains could be the awaited catalyst of the central bank to finally increase interest rates.

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Richard Franulovich, a senior currency strategist at Westpac Banking Corporation said “Financial conditions remain very buoyant post Brexit and the Fed will breathe a huge sigh of relief that we now have two back-to-back strong payrolls numbers,”

During the last FOMC meeting, the U.S. central bank noted that near term risks to the economic outlook have diminished. Analysts have been waiting for some blockbuster employment which will somehow push the Fed to pursue the rate hike. Given that the economy of the U.S. has been moving away from the impact brought by Brexit, and the recent economic data has been relatively steady, the central bank can go for a September rate hike.

Further, the market players watch out for the speech of Fed Chair Janet Yellen on August 26 in Jackson Hole Wyoming. Investors expect the chairwoman to give signs over the highly anticipated rate hike.

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