U.S. crude prices have settled down on Wednesday. In North American trade, WTI futures for October delivery are trading at $58.48, down $0.25, or 0.54% on the day.
Crude Steadies as Traders Catch a Breath
Crude oil has showed unusually strong volatility this week. On Monday, crude prices surge 12.7%, but retracted on Tuesday, falling 4.9%. Crude is back below the symbolic $60 level and is showing limited movement on Wednesday. The catalyst for the huge move on Monday was the attack on a Saudi oil refinery, but with repairs already underway, it appears that investors have calmed down.
Investors Eye Key Crude Inventory Report
The Energy Information Administration (EIA) will release its weekly report later at 14:30 GMT. The markets are expecting a fifth successive decline, with an estimate of -2.1 million. However, an inventory report which came out late on Tuesday surprised the markets, reporting a gain of 0.59 million. Will we see a similar reading from the EIA? If so, crude prices could head lower, as gains in inventory would reduce concerns over oil supplies.
Federal Expected to Lower Rates
Investors are waiting to see whether the Fed will cut rates on Wednesday, as it did at the previous policy meeting. The markets are expecting a 1/4 point cut – earlier in the day, the CME Group projected a 56% chance of a cut, but that has risen dramatically to 70% in the past few hours. A cut in rates usually has a muted impact on oil prices, but given the tremendous volatility in crude prices this week, I would not be surprised if crude shows some movement in response to the rate decision and the rate statement which follows.
This article was originally posted on FX Empire
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