Oil Little Changed Before Fed Rate Decision and Inventory Report

(Bloomberg) — Oil was little changed before a key interest-rate decision by the Federal Reserve, following a two-day rally on easing concerns over banking crises in the US and Europe.

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West Texas Intermediate futures traded near $69 a barrel after rising almost 4% over the previous two sessions, as US officials studied ways they might temporarily expand protection for all deposits. Both WTI and Brent were steady on Wednesday, with markets pricing in a roughly 80% chance that the Federal Open Market Committee will hike rates by a quarter point.

Oil traders are also waiting to see government data on US production and inventories.

The Energy Information Administration is set to release US supply and demand data. On Tuesday, the American Petroleum Institute said US crude inventories increased 3.26 million barrels last week, according to people familiar with the report.

“Financial market participants are closely watching the Fed meeting, the statement and guidance for the future, so that explains the lethargy today,” said Giovanni Staunovo, a commodities analyst at UBS Group AG. “We still have the EIA report out later today, so I would be surprised if oil stays at the current level until the FOMC meeting.”

Banking turmoil had driven crude to a 15-month low last week and whipped up volatility across global markets. A raft of market watchers remain bullish on the outlook, in part due to China’s rebound from Covid lockdowns, with predictions for prices in the second half ranging between $80 and $140 a barrel.

Russia has decided to keep its output at a reduced level through June, taking into account the current situation, Deputy Prime Minister Alexander Novak said. The nation pledged to cut its production by 500,000 barrels a day in March.

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