BRENT CRUDE OIL FUNDAMENTAL BACKDROP
Brent crude oil received a significant lift as we enter November after a surprise miss on the API crude oil weekly stock report yesterday (see economic calendar below). The data showed a decline in inventories by 6.53m barrels per day against a projected increase of 0.267m barrels per day. The EIA release later this evening shows a similar increase estimate with another disappointing print likely extending brent price appreciation.
Source: DailyFX economic calendar
Brent prices gained further traction this morning on the back of unconfirmed news that China may look to ease their ‘zero tolerance’ COVID-19 rules that have plagued the economy as well as contributing to demand destruction limiting upside on global commodities including brent crude.
From a dollar perspective, and the focus for today is the Fed’s interest rate decision. Money market are pricing in a 75bps incremental hike with a high degree of probability (98.4%) but markets will shift their attention to the post-announcement press conference. Forward guidance will likely be delivered from this platform and with much talk around a Fed ‘pivot’, any dovish slant to the speech could see the dollar decline giving brent some support.
FEDERAL RESERVE INTEREST RATE PROBABILITIES
BRENT CRUDE (LCOc1) DAILY CHART -UNDATED