Home WTI on the front foot in the upper $47.00s as crude traders eye incoming FOMC announcement
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WTI on the front foot in the upper $47.00s as crude traders eye incoming FOMC announcement

  • WTI trades on the front foot on Wednesday ahead of the FOMC meeting amid bullish macro-catalysts.
  • Front-month WTI futures set fresh post-pandemic high earlier on the session of $47.88.

WTI has swung between trading in the red and green in recent trade but remains well supported close to post-pandemic sell-off highs in the upper $47.00s. Trade is likely to continue to be choppy and directionless ahead of Wednesday’s FOMC monetary policy announcement at 19:00GMT, which could itself trigger some choppy price action. At present, front-month WTI futures trade with gains of about 20 cents or 0.4%.

Crude oil markets derive support from bullish macro-catalysts

The mood of both Brexit and US fiscal stimulus negotiations has improved since the start of the week; on the former, it seems as though the EU and UK are closing in on an agreement regarding level-playing field enforcement in exchange for UK access to the EU’s single market, though fisheries sounds as if it is not going so well. On the latter, major progress was reportedly made today towards clinching a $900B package and Congressional leaders continue to urge that they will not be leaving for Christmas without getting a deal done. Thus, risk appetite remains broadly supported and WTI continues to trade very close to its post-pandemic highs, of which it set fresh ones on Wednesday morning at $47.88.

Further supporting positive crude oil market sentiment was a larger than expected draw in official EIA crude oil stocks of 3.135M barrels (implying better than expected demand over the past week). This comes after last week’s huge 15M barrel inventory build and will ease some concerns regarding the near-term impact to crude oil demand of the spread of Covid-19 in the US.

 

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