DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange posted across the board losses on Wednesday, although all contracts moved off intrasession lows. The moves came after the Federal Open Market Committee pledged to keep interest rates at record lows through at least 2023 despite boosting its projections for gross domestic product growth for this year fueled by deeper public spending and an accelerated pace of administered vaccinations.

The FOMC concluded its two-day policy meeting Wednesday afternoon with a pledge to maintain its growth-boosting monetary policy for the next two years, sending equities sharply higher in afternoon trading.

As widely expected, the central bank maintained the federal funds rate in a 0%-to-0.25% band, with the majority of FOMC officials expecting no change in the key interest rate through 2023. In their statement following their meeting, the Fed added it would continue to increase the pace of its monthly bond purchases to a total of $140 billion a month, and use "all of its available tools" until "substantial further progress" has been made in the labor market. FOMC members project the unemployment rate will fall to 4.5% by the end of the year as the economy is likely to expand at the rate of 6.5% in 2021, up 2.3% from December's forecast.

"Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses," the Fed statement read. "The path of the economy will depend significantly on the course of the virus, including progress on vaccinations."

Since FOMC's last projections, the U.S. Congress passed two spending packages in December and March, totaling nearly $3 trillion in outflow from the U.S. Treasury into consumer wallets.

Of note, FOMC members upgraded inflation expectations well above the target range of 2% this year to 2.4%, while forecasting the longer-term inflation rate would remain at 2% in 2022 and 2023. Bond yields on 10-year Treasuries have pushed higher in recent weeks, reflecting the market's growing concern over rising inflation and an overheated economy. Following the Fed statement, however, bond yields slipped from recent highs to 1.65%, pressing the U.S. dollar index down to 91.435 against a basket of global currencies.

West Texas Intermediate contract for April delivery trimmed losses to close out below $65 per barrel (bbl) at $64.60 per bbl, and Brent May crude on ICE settled at $68 per bbl, down 39 cents from Tuesday's close. NYMEX ULSD futures declined 2.66 cents to $1.9061 per gallon, and the nearby-month RBOB contact plunged 5.41 cents, or 2.6%, for a $2.0471-per-gallon settlement.

All petroleum contacts traded sharply lower earlier in the session after Energy Information Administration data showed refined products supplies unexpectedly increased last week amid weaker demand for both gasoline and distillate fuels. Crude stockpiles also increased more than expected, up 2.4 million bbl, even as refineries increased inputs by 1.1 million barrels per day (bpd) from the previous week to 13.4 million bpd. Crude stockpiles have now sustained a building pattern for the past four weeks and stand about 6% above the five-year average.

Liubov Georges can be reached at liubov.georges@dtn.com