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Crude oil price was boosted by dwindling inventories and lower US dollar after oil price hike by Federal Reserve -by Ecork

Crude Oil, US Dollar, WTI, Brent, API, EIA, Pull Back, Fed – Talking Points

  • Crude oil prices Stability because stocks are down
  • The Federal Reserve rose as expected, but the US dollar fell
  • If the pullback remains high, where will WTI end up?

Crude oil opened higher in Asia today on the back of lower inventory levels and a weaker US dollar following the Fed’s 75 basis point (bp) rate hike.

on Tuesday, and American Petroleum Institute (API) ReportEd it Crude stocks fell by 4 million barrels last week.

Then the decline in stocks was confirmed on Wednesday when Energy Information Management (EIA) reported that holdings in the Strategic Petroleum Reserve decreased by 4.5 million barrels. This was a larger-than-expected decline and reduced reserves to 422 million barrels

Falling inventories have overshadowed fears of a global slowdown for the time being. Markets reacted to the Fed’s hike by selling the US dollar across the board with expectations of a slower pace and scope for future interest rate hikes.

Fed Chair Jerome Powell said in comments after the decision that the Summary Economic Outlook (SEP) from June was unchanged. This allayed market fears of accelerating interest rate hikes.

Powell made it clear that more price increases are coming but the rate of change is what the market is focusing on. The market priced a gain of at least 50 basis points at the September Federal Open Market Committee (FOMC) meeting.

The main feature of the crude oil price rally earlier this year was the sharp rise in lagging. It occurs when the contract closest to settlement is more expensive than the contract that is settled after the first contract. It highlights the market’s willingness to pay more for immediate delivery, rather than having to wait.

The decline eased this week and is approaching levels not seen since the Russian invasion of Ukraine. If it continues to fall, the price of oil may be able to slide lower.

At the same time, volatility in the oil market, as measured by the OVX index, has been relatively benign and may reveal that the market is not overly concerned with current pricing.

Looking ahead, Exxon Mobil Corp. and Shell Plc are due to report earnings this week and OPEC + willis being Meetsa job next week To assess their supply policy.

WTI Oil, Lagging, and Volatility (OVX)

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— By Daniel McCarthy, Strategist for DailyFX.com

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