Oil Futures Mixed Thursday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures traded mixed on Thursday morning, with ULSD lower while RBOB and West Texas Intermediate were supported by a weakening dollar ahead of a decision on interest rates by the U.S. Federal Reserve.

The Fed is set to announce its decision at 1 p.m. CDT followed by a news conference by Chair Janet Yellen, and most of the focus now is on whether the central bank will hike interest rates for the first time in nine years.

However, given the economic slowdown in China and other emerging markets and data released Wednesday showing a lack of inflation, analysts believe a rate hike is unlikely, which has prompted a downturn in the U.S. dollar index.

"The day after [WTI] prices rose 5.7% the dogma of the dollar versus oil inverse relationship has come to a screeching halt ahead of the most exciting FOMC meetings in a decade," said analyst Phil Flynn at Price Futures Group in Chicago. "As the Fed moves closer to raising interest rates and getting closer to a normalization of interest rate policy the correlation between the dollar and oil is breaking down."

At last look, NYMEX October WTI crude futures were 15 cents higher at $47.30 barrel, moving off a two-week spot high of $47.57. ICE November Brent eased 12 cents to $49.63 bbl after inside trade.

NYMEX October ULSD futures eased 0.41 cents to $1.5373 gallon while the NYMEX October RBOB futures contract nudged up 0.11 cents to $1.3832 gallon after inside trade.

On Wall Street, U.S. equities were lower ahead of their open despite new data from the Labor Department showing initial jobless claims fell by 11,000 to 264,000 in the seven days ended Sept. 12.

The report on initial claims shows the domestic economy remains resilient in the face of a weaker global outlook. With employers keeping most of their workers and even hiring more, the Fed is now focusing on weak inflation and economic headwinds from Asia when deciding whether to raise rates.

The oil futures complex rallied on Wednesday after the Energy Information Administration reported a bigger weekly domestic crude oil stock draw than the market expected.

The crude draw also was seen at the Cushing, Oklahoma, supply hub that serves as the delivery point for the NYMEX-traded U.S. benchmark crude oil. But the data on products were bearish, showing distillate and gasoline stockpiles rose more than expected while demand eased in the week ended Sept. 11.

George Orwel can be reached at george.orwel@dtn.com