Softer USD Boosts Oil Prices Ahead Of Fed

Oil prices are slightly stronger today with WTI up 0.7% to just over $87/bbl and Brent + 0.8% to around $93.50 on the back of a weaker USD.

• WTI remains just above its 20-day moving average and continues to trade in the $85-$95/bbl range that it’s been in since the middle of the year.
• The market is awaiting the Fed decision on Wednesday, as another outsized 75bp hike is likely to worsen already heightened supply concerns. However, OPEC+ would probably reduce production further at any signs of weakening demand.
• The US tried to calm supply fears in the market by allowing ships that loaded Russian oil before December 5 until January 19 to unload.
• US President Biden made comments overnight that if oil and gas companies don’t use their excess profits from high prices to increase investment in increasing production, then the government would look at its options including increased taxation. In reality, this would be very difficult to achieve.
• OPEC expects demand for oil to remain strong into the mid-2000s and as a result called for more investment in the industry.