Crude Range Trading Ahead Of Fed Decision

Oil prices have traded in a narrow range to be down moderately during APAC trading today but are still up more than 2% on the week. WTI is 0.2% lower at $82.57/bbl, close to the intraday high, and Brent is also down 0.2% to $87.25. The market is waiting for the Fed decision out later today. While it is widely expected to be on hold this month, concerns that rate cuts will be delayed and thus pressure demand have weighed on crude. The USD index is flat.

• Supply developments are being watched closely given geopolitical issues and the IEA’s shift to forecast a deficit this year.
• Bloomberg reported a 1.52mn barrel crude inventory drawdown last week, a lot more than expected, according to people familiar with the API data. While distillate stocks rose 500k, gasoline fell a further 1.6mn pointing to robust demand. The official EIA data is out later today.
• JP Morgan has estimated that Ukrainian attacks on Russian refineries have reduced its capacity by 900kbd and it could take weeks or even months for it to come back on line. As a result, Russia will increase its crude exports from western ports by almost 200kbd which may rise if there are further attacks. Lower refining demand in Russia would normally put downward pressure on oil prices, but the market has added a geopolitical risk premium as Ukraine continues to target energy infrastructure.
• Later the Fed decision and projections are announced (see MNI Fed Preview). Also, the ECB’s Lagarde, Lane and Schnabel all appear. In terms of data, UK CPI/PPI for February print.