Fed Chair Powell Dampens Outlook on Rate Cuts
December 20, 2024
The energy markets pulled back into their trading range yesterday mostly on the comments from Federal Reserve Chairman Jerome Powell. Powell was out trying to walk back some of the talk about rate cuts and said that stubborn inflation would make the Fed more cautious. Just a couple of weeks ago bond traders had six rate cuts priced in, totaling over 100 basis points. Now, they just have two for a total of 50 basis points.
Demand growth for energy has been a concern for these markets and China is a big part of the outlook. Yesterday, Chinese oil company Sinopec reported that it believes China’s crude demand will peak in 2027.
JP Morgan is forecasting crude surplus supply of 1.2 million bpd in 2025. It predicts a 1.08 million bpd increase in non-OPEC supply and flat OPEC+ output.
November leading economic indicators came in at up .3%. Economists were looking for down .1% and the previous was down .4%. That .3% is the first positive look in LEI in the last 32 months.
Final Q3 GDP read came in at up 3.1%. Economists were looking for 2.9% and previously this ticked in at 2.8%.