Oil Futures Waver Ahead of EIA Data, Fed Chair's Comments

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Except for the RBOB contact which slipped, oil futures on the New York Mercantile Exchange and Intercontinental Exchange traded on either side of unchanged early Wednesday after data from the American Petroleum Institute showed a larger-than-expected decline in U.S. commercial crude oil inventories and builds in refined products supplies during the week ended Jan. 22, while investors await a decision on interest rates by the Federal Open Market Committee, although no change is expected to the central bank's policy of ultra-low interest rates and bond purchasing program.

American Petroleum Institute reported late Tuesday that U.S. crude supplies declined 5.3 million barrels (bbl) during the week ended Jan. 22, exceeding market expectations for a marginal 100,000 bbl drawdown. The data also showed gasoline stockpiles rose by nearly 3.1 million bbl, while distillate inventories climbed by 1.4 million bbl from the previous week. Crude stocks at the Cushing, Oklahoma, storage hub, declined 3.5 million bbl for the week.

Inventory data from the U.S. Energy Information Administration will be released according to a regular schedule this week at 10:30 a.m. ET. On average, EIA is expected to show inventory increase of 1 million bbl for gasoline and a decline of 500,000 bbl for distillate fuels.

In early trading, U.S. crude West Texas Intermediate benchmark for March delivery edged slightly higher to near $52.86 bbl, with the prompt-month Brent contract advancing 32cts to trade just above $56 bbl before expiration Friday afternoon. Brent April futures traded at a 28cents discount against the expiring contract. NYMEX February ULSD futures added 0.49 cents to $1.6033 gallon, with the next-month delivery March contract trading near $1.5709 gallon. NYMEX February RBOB futures fell 0.52 cents to $1.5755 gallon, with the March contact expanding its discount to the front-month contract to 0.68 cents. Both contracts expire Friday afternoon.

U.S. equities suggest another mixed open on Wall Street, with contacts tied Dow Jones Industrial slipping 80 points and S&P 500 futures indicate a five-point advance. U.S. Dollar Index added to recent gains, rising 0.25% to 90.404 against a basket of global currencies as investors adopt a cautious stance ahead of the monetary policy decision from the FOMC scheduled for 2 p.m. ET release.

Markets will look for a reiteration of low-rate pledges from Chairman Jerome Powell when he delivers his remarks after the meeting's conclusion. Earlier this month, Powell said the U.S. economy is far from the Fed's goal of a sustainable recovery, and any changes to the current policy of quantitative easing are unlikely.

President Joe Biden suggested this week he would be willing to negotiate the terms of $1.9 trillion stimulus proposal in a bid to reach a compromise with Senate Republicans. Several lawmakers are arguing direct payments to Americans must be contingent on income levels, so they are targeted to families most in need. Should the plan be approved by U.S. Congress, the total COVID-19 relief aid since the start of the pandemic would total $5 trillion, lifting U.S. national debt above $30 trillion by the end of 2021.

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

Liubov Georges