Oil is on a charge on Wednesday ahead of the latest decision from the US Federal Reserve on interest rates, and after some solid news about the state of supply and demand in the industry overnight.
Just after 8:45 a.m. BST (3:35 a.m. ET) both major oil benchmarks are trading more than 1% higher and are at highs not seen since November last year.
Brent, the international benchmark is up by 1.43% to trade at $46.23 per barrel. That’s the benchmark’s highest level since the end of November 2015. Here’s how it looks this morning:
West Texas Intermediate (WTI) has gained in a similar fashion, and is up by 1.23% to $44.58. Here’s how that looks:
Oil prices have been boosted on Wednesday by news that the American Petroleum Institute’s weekly crude stockpile report showed a larger than expected drop in inventories of just over a million barrels. That fall goes a little way to addressing the huge imbalance in supply and demand in the markets, the key issue that has being subduing prices of late.
Markets are also in a positive mood ahead of the Fed’s latest interest rate decision later on Wednesday. The Fed’s FOMC is widely expected to leave rates on hold, but comments from chair Janet Yellen could shed light on whether the Fed’s attitude towards further rate hikes this year has shifted.
Here’s what Mike van Dulken from Accendo Markets has to say this morning about oil’s rise. He notes that oil could slip later in the day (emphasis his):
“Crude oil prices are STILL strong this morning after making new YTD highs overnight as traders appear to be reacting to a perceived re-balancing in supply and demand. Brent and WTI are currently consolidating after making breakouts above $46 and $44 respectively. Note buyers’ remorse could see a little retracement today.”