DTN Oil Update
Oil Futures Fall After the Fed Maintains Steady Rates
HOUSTON (DTN) -- Oil futures dropped Wednesday following the Federal Reserve's decision to keep interest rates unchanged and despite the Energy Information Administration reporting a draw in U.S. commercial crude inventories for the previous week.
The front-month NYMEX WTI futures contract fell by $1.09 bbl to $58.00 bbl, and ICE Brent for July delivery dropped by $1.12 bbl to $61.03 bbl.
June RBOB gasoline futures declined by $0.0403 to $2.0242 gallon, while the front-month ULSD futures contract decreased by $0.0344 to $1.9744 gallon.
The U.S. Dollar Index strengthened by 0.658 points to 99.705.
The bearish sentiment in the oil futures market was also supported by expectations of ample supplies, as OPEC+ countries have increased output in recent weeks.
Eight OPEC+ countries over the weekend agreed on a 411,000-bpd production increase in June, in addition to the 2.2 million bpd released in early April.
Meanwhile, U.S. commercial crude oil inventories, excluding the Strategic Petroleum Reserve, dropped by 2 million bbl to 438.4 million bbl last week, 7% below the five-year average for this time of year, according to data released by the U.S. Energy Information Administration Wednesday morning. This figure was lower than the 4.48 million bbl draw reported by API on Tuesday, May 6, for the same reference week.
The EIA reported that gasoline stocks rose by 200,000 bbl to 225.7 million in the week ending May 2. In contrast, the API reported a 1.97 million bbl draw for the same period.
Distillate fuel stocks fell by 1.1 million bbl to 106.7 million bbl last week, according to EIA, which was lower than a 2.24 million bbl build reported by API for the same week.
Separately, Fed Chair Jerome Powel reiterated Wednesday that the U.S. economy looks solid, and the Federal Reserve has decided to maintain its monetary policy unchanged with federal funds at a 4.25-4.50% range.
Market participants will now focus on the conversations between U.S. and China officials scheduled for Thursday, May 8, during which they will discuss reciprocal trade tariffs imposed by both countries in recent week.
U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are scheduled to meet with Chinese representatives in Switzerland. This will be the first official exchange on the topic of trade since the Trump administration imposed a total 145% trade tariff on imported Chinese goods, which China retaliated against with 125% tariffs on U.S. goods.
