Crude oil prices ticked higher today after the U.S. Energy Information Administration reported an estimated inventory draw of 1.6 million barrels for the week to September 13.
This compared with a modest build of 800,000 barrels for the previous week that weighed on prices already depressed by demand concerns.
This week, however, the biggest news on the oil market is the upcoming rate announcement by the Federal Reserve, scheduled for 2 pm Eastern Time. Market participants and analysts alike expect the central bank to announce its first interest rate cut in four years as the economy demonstrates resilience and inflation is down.
Lower interest rates will likely boost oil prices unless concern about demand growth in China trumps the positive development. The big question for those waiting for the Fed’s decision is whether the cut would be a modest 0.25% or what some analysts are calling a jumbo cut of 0.5%.
Meanwhile, the EIA estimated a minor gasoline inventory increase of 100,000 barrels for the week to September 13, with production averaging 9.7 million bpd in the period.
These figures compared with an inventory build of a sizable 2.3 million barrels for the previous week, when production averaged 9.4 million barrels daily.
In middle distillates, meanwhile, the EIA saw inventories add a modest 100,000 barrels last week, with production at an average 5.1 million barrels daily.
This compared with an inventory increase of 2.3 million barrels, the same size as the gasoline build, and average daily production of 5.2 million barrels.
Demand for all fuels should pick up in a lower-rate environment, as that would reduce costs for everything from energy to real estate, giving the economy a much needed boost.
“It's been a long marathon — the Fed feels it's time to lower interest rates again,” Sara Rathner, co-host of the Smart Money podcast and a personal finance expert for NerdWallet, told CBS ahead of the Fed rate announcement. “Consumers are definitely feeling the pinch. It's been this one-two punch of higher interest rates and inflation.”
ADVERTISEMENT
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
- Elon Musks’ SpaceX Completes World’s First Private Spacewalk
- Italy Shuts the Door on New Oil Exploration
- U.S. Oil and Gas Rig Count Jumps
