DTN Oil Update
Oil Steadies as it Awaits Fed's Decision Amid Supply Watch
VIENNA (DTN) -- Oil prices steadied Monday morning, Oct. 27, after climbing more than 7% last week. Focus returns this week to concerns about oversupply amid tepid support from an expected U.S. interest rate cut.
The NYMEX WTI contract for December delivery rose $0.13 to $61.63 barrel (bbl). ICE Brent for December delivery climbed $0.10 to $65.30.
November RBOB gasoline futures retreated $0.0041 to $1.9186 gallon. Front-month ULSD futures bucked the trend, rising a seventh straight day with a $0.029 advance to a one-month high $2.4321 gallon.
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The U.S. Dollar Index edged lower by 0.197 points to 98.550 against a basket of foreign currencies.
The U.S. central bank's Federal Open Market Committee holds a two-day meeting this week that will result in a decision on interest rates on Wednesday. Market expectations are for a quarter percentage point cut, similar to the Fed's decision in September.
Last week's rally in oil, the largest since June, was fueled by reports of across-the-board draws to inventories of U.S. crude oil and fuel, as well as new U.S. sanctions on Russian oil.
Despite reported progress in U.S.-China trade negotiations, global oil inventory outlooks remained bearish.
Presidents Donald Trump and Xi Jinping are expected to hold a summit on the sidelines of the Oct. 31-Nov. 1 Asia Pacific Economic Cooperation in South Korea.
The meeting could result in a trade deal after heightened tensions between the two nations lately, arising from U.S. threats to impose triple-digit import tariffs on Chinese goods due to China's changes in rare earth minerals exports that could impact American industry.
Even if a U.S.-China agreement were to boost oil demand growth, the effect will not be immediate, nor is it likely to make up for the additional barrels the Organization of Petroleum Exporting Countries and its partners are planning to pump over the coming months.
Crucial indicators gauging the health of the U.S. economy, meanwhile, continue to be delayed as the federal government shutdown is entering its fifth week.
Durable goods orders for September from the U.S. census bureau will not be published as scheduled today, nor will the Bureau of Economic Analysis release its first of three estimates for third quarter GDP growth.
BEA's PCE price index for September, the Federal Reserve Bank's favored inflation metric, is equally unlikely to be published as scheduled Friday.