Oil Rises From Lowest Since June After US Stockpile Drawdown
12.14.2023 By Tank Terminals - NEWS

December 14, 2023 [BNN Bloomberg]- Oil advanced from a five-month low on positive demand signals including a drop in US inventories and signs the Federal Reserve is preparing to cut interest rates.

 

West Texas Intermediate rose toward $70 a barrel, after climbing 1.3% on Wednesday from its lowest since late June. Global benchmark Brent was near $75. US crude stockpiles declined for a second week, according to the Energy Information Administration.

The Fed held interest rates steady for a third straight meeting and gave the clearest signal yet that its aggressive tightening campaign is finished. Chair Jerome Powell indicated policymakers are now turning their focus to when to cut borrowing costs as inflation continues to slow. Treasuries surged and an index of the dollar weakened to a four-month low, making commodities priced in the greenback more attractive for international buyers.

“The dovish takeaway from the FOMC meeting has been a surprise to some, who were expecting the Fed to maintain a tough stance,” said Yeap Jun Rong, market strategist for IG Asia Pte. That triggered risk-on sentiment, “which oil prices were able to ride on,” he said.

Crude is still down by more than a quarter from a high in late September on a surge in exports from non-OPEC countries and fears the demand outlook is worsening. In addition, the market is skeptical whether deeper voluntary supply cuts by the Organization of Petroleum Exporting Countries and its allies will be fully adhered to.

Traders will be eyeing the International Energy Agency’s monthly report due later Thursday, the last in a trio of major market outlooks this week. OPEC continued to forecast a significant shortfall in oil supplies next quarter, an outlook at odds with its own efforts to rein in production.

 

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