Prices Fail To Rebound, Waiting For The Fed Decision

Oil has failed to take back any of its losses in the APAC session today as it treads water ahead of the Fed decision later. It fell over 5% on Tuesday and today it has been trading sideways. WTI is currently trading around $71.60/bbl between the intraday low of $71.51 and $71.69 and Brent is holding above $75 at about $75.32 between a low of $75.18 and a high of $75.41. The USD index is down 0.2%.

• Russia announced earlier in the year that it was going to reduce output and then extended it when OPEC+ announced its recent production cut. But according to Bloomberg, tanker-tracker data is indicating that Russia’s oil shipments jumped to 4mbd last week from 3mbd the week before. Russian oil earnings have been rising again and the government is planning to restart FX purchases.
• It is generally expected that the Fed will hike rates 25bp today but that it could signal that it is about to pause (see MNI Fed Preview: May 2023).
• Oil has been weighed down by not only the upcoming FOMC decision but also weaker risk appetite, the US debt ceiling impasse and disappointing US job opening data suggesting slower growth plus this week’s bank rescue.
• April US ADP employment is released, which should give some direction for Friday’s employment data. It is expected to rise 148k after 145k last month. There is also the services PMI and non-manufacturing ISM for April. EIA US crude and fuel inventory data also print. The Fed announcement will follow after the data.