Market Report & Analysis for 3/21/2019 Morning Edition
Morning Market Overview
New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent futures moved lower in early trading Wednesday morning, with the West Texas Intermediate, Brent and RBOB futures dropping back from multi-month highs after testing overhead resistance.
The decline comes despite bullish data released late Tuesday from the American Petroleum Institute showing a 2.133 million bbl drawdown in U.S. commercial crude supply during the week-ended March 15. API also reported larger-than-expected declines for gasoline and distillate fuel for the week profiled at 2.794 million bbl and 1.607 million bbl, respectively.
The Energy Information Administration will release its weekly report at 10:30 AM ET. The Wall Street Journal is reporting high level negotiations between U.S. and Chinese representatives have been scheduled in Washington and Beijing with the goal of reaching a bilateral trade agreement by late April. China is expected to increase imports of U.S. LNG and crude oil under an agreement.
Earlier this week, Reuters reported crude consumption by refineries in China are expected to reach a record high in the third quarter at more than 13 million bpd “as two mega-refineries ramp up and others exit maintenance.” U.S. dollar strengthened in early trading, moving off Tuesday’s three-week low at 95.730 ahead of the afternoon press conference by Federal Reserve Chairman Jerome Powell at the conclusion to the two-day Federal Open Market Committee meeting. The Fed is expected to again emphasis it will go slow before hiking the federal funds rate this year, now at 2.5%.
The market sees one rate hike in 2019 although there are growing expectations the central bank might even cut the key benchmark rate by 25 basis points later this year to contend with slowing U.S. economic growth. The central bank will also provide an update on its economic projections. In December, the Fed projected a 2.3% growth rate for 2019, slowing from 3% in 2018.
