Crude Lower Ahead Of Fed, Geopolitics Remain In Focus

Oil prices are moderately weaker ahead of the Fed decision later today. Brent has held above $82 during APAC trading and is currently down 0.4% to $82.18/bbl. WTI is also 0.4% lower at $77.52. Geopolitical tensions have supported crude this month and it looks set to rise around 7%. The USD index is up 0.2%.

• US President Biden said that he did not want a war with Iran after 3 US troops were killed following a drone attack by Iranian-backed militants, which has weighed on oil today. Concern that the conflict in the Middle East could spread to Iran following the incident had supported crude, and as a result attention will remain on the US’ response to the strike.
• Bloomberg reported that US inventories fell a larger-than-expected 2.49mn barrels last week after 6.67mn, according to people familiar with the API data. Gasoline stocks rose 584k but distillate fell 2.13mn. The official EIA data is out later today.
• The focus of today will be the Fed decision out later; no change in rates is expected (see MNI Fed Preview here). There are also January US ADP employment & MNI Chicago PMI, and Q4 employment cost index. German & French preliminary CPIs also print.