Oil Rallies Ahead of US Fed Meeting
Oil prices increased ahead of the US Federal Reserve (Fed) meeting. Brent crude traded at $85.72 per barrel, a 0.82% increase from the closing price of $85.02 a barrel in the previous trading session on Tuesday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $81.11 per barrel, up 0.11% from Tuesday’s close of $81.02 per barrel.
investors await Fed’s monetary policy decisions on late Wednesday and Fed Chair Jerome Powell’s remarks following the meeting, which are expected to maintain the policy rate high for longer than anticipated.
Yesterday, American Petroleum Institute’s (API) estimated a rise in US crude oil stockpiles of 1.3 million barrels, against the market expectation of an increase of 1.6 million barrels.
The data indicated a decrease in the world’s biggest oil consumer country’s oil demand.
Meanwhile, the price surge was tempered by concerns that China, the world’s top oil importer, would experience a decline in oil consumption as a result of lower-than-anticipated industrial activity data.
The crude oil front-month contract has been trading soft at around US$85.7/bbl this morning as the risk premium continues to soften in the absence of any immediate danger to the oil supply from the Middle East.
The Organisation of Petroleum Exporting Countries (OPEC) oil production increased by another 180Mbbls/d in October compared to September with higher production coming from Nigeria, Angola, Iraq and Iran.
ING said in a note that the risk of an escalation in the Middle East cannot be ruled out and the market remains cautious on that front.
Weekly inventory data from the API shows that the US crude oil inventories increased by 1.35MMbbls over the last week; lower than the average market expectations of around 1.6MMbbls.
Cushing crude oil stocks are reported to have increased by 375Mbbls. On the products side, API reported that gasoline and distillates inventories fell by 357Mbbls and 2.48MMbbls respectively, over the week ending 27 October. The more widely followed Energy Information Administration (EIA) report will be released later today.
India’s crude oil imports dropped to a year-to-date low of 17.4mt in September 2023 as firm prices and refinery maintenance weighed on crude oil demand.
However, some reports suggest that imports may have recovered in October as refineries increased operating rates whilst some of the state refiners also increased imports to meet annual purchase obligations under the term deal.
The European gas market traded softer yesterday following the expectations of the arrival of the Ciaran storm over the coming days, which could bring down electricity demand due to infrastructure damages.
Meanwhile, gas storage is running nearly full in Europe (99.3% of the capacity as of 30 October) as unusually mild temperatures have reduced the overall heating consumption in the nation. Canada Pledges $18m For Poverty, Humanitarian Response in Nigeria
