DTN Oil Update
Oil Futures Mixed on Fed Rate Cut, Low Crude Inventories
HOUSTON (DTN) -- Oil futures were mixed Wednesday following the confirmation of a 25-basis-point cut in interest rates by the Federal Reserve and the Energy Information Administration's data showing a draw on crude inventories last week.
At 3:25 p.m. EST, NYMEX WTI for January delivery rose $0.14 to $70.22 barrel (bbl) while international crude benchmark Brent for February delivery dropped $0.18 to $73.01 bbl. NYMEX January ULSD spiked $0.0206 to trade at $2.2485 gallon and front-month RBOB on NYMEX edged down $0.0093 to $1.9346 gallon. Meanwhile, the U.S. dollar index slid 1.162 to 106.64 against a currency basket.â?¯
The bullish sentiment in the crude futures market Wednesday morning was tempered after the Federal Reserve's decision to cut interest rates by 25 basis points. The move was widely expected by the market, which also anticipates the Federal Reserve will continue trimming interest rates gradually next year. At the conclusion of its Federal Open Market Committee today, the Fed announced that it is lowering its target range for the federal funds rate to 4.25%-4.50%.
The Fed kept unchanged its projection of 4.4% inflation for this year, and for 2024 it revised to 3.9% from 4.3%, projected in September.â?¯The Fed also revised upward its forecast of the U.S. GDP to 2.1% for 2024 and to 2.5% for next year, from 2.0% estimated for both years last September.
Meanwhile, EIA data showed that commercial crude oil inventories in the U.S. fell by 900,000 bbl to 421 million bbl in the week ended Dec. 13.
But in the same week, gasoline stocks rose drastically by adding 2.3 million bbl to reach 222 million bbl, indicating a soft demand despite the proximity of the year-end holidays.â?¯
In contrast, distillate fuel stocks reported a draw of 3.2 million bbl compared to last week, reaching 118.2 million bbl, according to EIA data.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
