The Federal Reserve voted to cut interest rates by 50 basis points from 5.5% to 5%, while many analysts expected a smaller 0.25% cut.
The Energy Information Administration reported a drop of 1.6 million barrels in US crude stocks last week to a total of 417.5 million barrels, while analysts expected a drop of 0.2 million barrels.
Gasoline stocks rose 0.1 million barrels to 221.6 million barrels, while distillate stocks rose 0.1 million barrels to 125.1 million barrels.
US stock indices were little changed on Wednesday as markets await the crucial Federal Reserve policy decisions later today.
The Fed is widely expected to cut interest rates for the first time in four years, followed by a press conference by Fed Chair Jerome Powell, which could provide clues on the future path of US monetary policies.
According to the Fedwatch tool, there’s a 59% chance of a 0.5% Fed rate cut today, and a 41% chance of a 0.25% rate cut.
On trading, Dow Jones fell 0.1% as of 16:01 GMT to 41,540, while S&P 500 was little changed at 5634, as NASDAQ barely added 0.1% to 17,658.
- Another round of weak Chinese data
- Fed about to cut interest rates
Global oil prices fell in American trade on Wednesday with US crude extending its losses for the second session away from two-week highs, while Brent gave up two-week highs on profit-taking, following a surprise buildup in US crude stocks according to initial data.
Global oil prices are also weighed down by concerns about weakness in Chinese demand.
Prices
US crude fell 1.85% today to $68.61 a barrel, with a session-high at $69.97.
Brent fell 1.8% today to $72.34 a barrel, with a session-high at $73.73.
On Tuesday, US crude lost 0.85% after moving away from two-week highs at $70.66.
Brent rose 1.1% yesterday to December 4 highs at $72.24.
US Stocks
Initial data from the American Petroleum Institute showed commercial crude stocks in the US rose by 2 million barrels in the week ending December 13, while analysts expected a drop of 0.1 million barrels.
It’s the first such weekly buildup in the past month, and a sign of slowing demand in the world’s largest fuel consumer.
Now investors await official inventory data from the Energy Information Administration later today.
Chinese Data
Recent Beijing data showed industrial production fell to five-month lows in August, while retail sales and new home sales softened as well.
Weak Chinese data is hurting market sentiment and casting a negative outlook for growth and demand on fuel in the world’s largest crude importer.
China’s refinery production also declined for the fifth straight month in another sign of slower demand.
US Rates
Traders expect the Federal Reserve to cut interest rates by 50 basis points today instead of the original 0.25% cut that was expected a few weeks ago.
Lower US interest rates usually improve economic growth and activities, and will likely increase fuel demand.
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