Crude extends retreat ahead of US rate decision
Quantum Commodity Intelligence – Crude oil futures Thursday were drifting lower after Federal Reserve officials made their third and final rate cut of 2024 at Wednesday’s meeting.
Front-month Feb25 ICE Brent futures were trading at $72.79/b (1730 GMT) versus Wednesday’s settle of $73.39/b and an intraday low of $72.64/b.
At the same time Feb25 NYMEX WTI was trading at $69.37/b versus Wednesday’s settle of $70.02/b, while the Jan25 contract was trading at $70.10/b heading into the expiry.
Benchmarks opened lower despite the Federal Open Market Committee trimming its funds rate by 25 basis points, targeting a range between 4.25% and 4.50%, a move largely priced in before to the announcement.
Oil prices eased back after disappointing comments from the FOMC, forecasting two fewer rate cuts in 2025 than they had previously expected, as persistent inflation delays the rate-cutting cycle.
“We moved pretty quickly to get to here, and I think going forward obviously we’re moving slower,” Fed Chair Jerome Powell said at the post-meeting press conference.
The comments prompted losses across financial markets as risk-off sentiment spilled over into the commodities complex.
The Dollar Index also surged to fresh yearly highs of above 108 points, further dampening sentiment across the commodities sector.
Yemen
Prices briefly rebounded amid the worsening geopolitical tensions in the Middle East. This came after Israeli forces pummelled targets in Yemen after Houthi militants had fired a missile into central Israel.
While not immediately threatening oil supplies, it further destabilises an already volatile region and potentially adds to the threat posed to commercial vessels, including those as far away as the eastern Mediterranean.
Otherwise, US commercial crude inventories dropped almost 1 million barrels last week, while distillate inventories slumped 3.2 million barrels amid robust winter demand.
However, EIA data also revealed gasoline stocks climbed for the fifth straight week as imports reached their highest level since August, offsetting the draws in crude and distillates.
