Investing.com – Oil prices drifted today as the long roads to Buenos Aires and Vienna beckon.
But there’s also the Fed diary to consider and what it could do to oil’s volatility between now and Friday’s G20, as well as the OPEC meeting a week later.
Instead of reacting earnestly to latest EIA data, which reported a , again larger than expected, participants in the oil market spent Wednesday waiting for Fed chief Jerome Powell’s speech on “The Federal Reserve’s Framework for Monitoring Financial Stability” at the New York Economic Club.
The payoff? A message interpreted as dovish for any rate hike plans for 2019.
The consequent dip in the and jump on crossed over into oil — equities and oil have moved in lock step lately despite the diversification offered by commodities — delaying momentarily what seems to be oil bears’ ultimate target, breaking the $50 per barrel support for U.S. West Texas Intermediate.
“Today’s EIA report is taking a back seat to the Fed chief’s speech,” said Tariq Zahir, managing member at Tyche Capital Advisors, an oil-focused fund in New York. “On top of that, we have the G20 meeting coming up on Friday, where the Saudi and Russian energy ministers in attendance could discuss production cuts even before the Dec. 6 OPEC meeting.”
Powell said the Fed’s “gradual pace of raising interest rates has been an exercise in balancing risks,” but added “there is no preset policy path.” Aside from the Fed chief’s speech, the central bank will also publish on Thursday minutes of its November policy meeting.
U.S. was up 17 cents at $51.73 per barrel by 12:40 pm ET (17:40 GMT). WTI remains about 33% below four-year highs of nearly $77 a barrel hit in early October. It came just a dime short of testing its year-long support of $50 a barrel on Monday after hitting a 13-month low of $50.10.
U.K. , the global benchmark for oil, rose 13 cents to $60.53. Brent remains about 30% below four-year highs of around $87 per barrel struck early last month. On Friday, it fell for the first time below the $60 support that had been its perch since July 2017.
The EIA said on Wednesday that crude oil rose by 3.58 million barrels last week vs. forecasts for a build of just 770,000 barrels. Inventories have grown by a staggering 56 million barrels over the past 10 weeks. At 450 million barrels in total, U.S. crude inventories are also at their highest level since the last Thanksgiving week.
The report said unexpectedly fell by 760,000 barrels vs. expectations for a 640,000-barrel build. But registered a surprise gain of 2.61 million barrels, compared to forecasts for a drop of 860,000.
Volality in oil has picked up ahead of the G20 on speculation whether President Donald Trump and his Chinese counterpart Xi Jinpeng will be able to strike a trade deal on the sidelines of the Buenos Aires meeting.
Trump, in an interview with The Wall Street Journal on Monday, said it was “highly unlikely” he would accept Beijing’s request to hold off on Washington’s plans to boost tariffs to 25% on some $200 billion of Chinese goods, due from Jan. 1.
A Bloomberg poll of analysts and a note by Goldman Sachs (NYSE:) have meanwhile predicted that Saudi Arabia will push for a production cut at the enlarged OPEC+ meeting, which includes Russia, in Vienna next week, despite persistent tweets from Trump discouraging any cuts that lead to higher oil prices.
Source: Investing.com
