Prices Down On Hawkish Fed Hold, US Crude Stocks Down

Oil prices fell over a percent on Wednesday but were up on the day before the Fed announcement. But they slid following the hawkish hold and the surprise 50bp upward revision to the median end-2024 fed funds rate to 5.1%, thus pointing to rates staying higher for longer. This drove some profit taking in the market. The USD index finished 0.2% higher as a result.

• WTI fell 1.4% to close below $90 at $89.24/bbl. It has started the day slightly stronger at $89.27. It reached a high of $91.07 before the Fed which was 0.7% above Tuesday’s close. Support is at $86.53, the 20-day EMA.
• Brent closed 1.2% lower at $93.18/bbl. Its intraday high of $94.72 was 0.4% higher than Tuesday’s close. Support is at $90.37.
• The official EIA US inventories reported a stock drawdown of 2.14mn barrels last week, signalling tight supply fundamentals. Cushing inventories fell to 23mn barrels, which is only about 2mn above minimum operational levels. Distillate fell 2.87mn to their lowest since May 1 and gasoline -831k to lowest since September 1. The SPR rose 600k to 351.2mn barrels.