Crude Lower Ahead Of Fed And OPEC Report

Oil prices are moderately lower in APAC trading today after falling around 3.5% on Tuesday on growing evidence of rising supply while demand is lacklustre. Prices are off their intraday highs with Brent down 0.3% from yesterday’s close finding support around $73/bbl and WTI is -0.2% to $68.48. The USD index is 0.1% higher ahead of the Fed decision and updated forecasts later.

• Bloomberg shipping data showed Russian exports at their highest since July and the EIA revised up 2023 US supply by 30kbd but revised down 2024 by 40kbd and expected global output by 1.36mbd from last month. OPEC’s monthly report is today and the IEA’s on Thursday. There is significant scepticism in the market that OPEC’s new quotas will be adhered to.
• Futures contracts continue to point to a widening market surplus and according to Bloomberg the 12 month WTI spread moved into contango yesterday for the first time in 2023.
• Bloomberg reported that US crude inventories fell 2.35mn barrels in the latest week, according to people familiar with the API data. Product stocks rose though with gasoline up 5.8mn and distillate 276k. The official EIA data is out later today.
• Later the Fed decision is announced but it is widely expected to leave rates unchanged (see MNI Fed Preview). There will also be updated forecasts and a press conference, which will be important for oil markets. On the data front there’s US November PPI data and UK & euro area IP.