Fed “Under No Pressure to Lower Interest Rates”
March 6, 2024
The API in its weekly update estimates called crude oil supplies up 423,000 barrels with the average estimate for today’s DOE report to be up 2.116 million barrels. Gasoline from the API was down 2.77 million barrels with the estimate for today for a decline of 1.640 million. Distillates on the API we called down 1.77 million and the estimate for today is down 665,000.
The estimates for today’s propane inventory report are for stocks to be down 2.2 million barrels.
The current outlook of weak Chinese demand after they set their economic growth target at 5% is in the background as a drag on crude oil prices.
Interfax news agency quoted Russian President Vladimir Putin as saying that the OPEC+ alliance aims at price stability in the oil market, not endless price increases and so far, it is succeeding in this.
HSBC said, “Our view remains that OPEC+ has no exit strategy as we see no space to fully unwind the cut in the medium term.” It said spare capacity overhang will cap price upside. Its Brent oil price assumptions remains at $82.50 per barrel for 2024 and $76.50 per barrel from 2025 onwards. The bank forecast a deficit of 1 million bpd on average for 2024, up from a previous estimate of 600,000 bpd and added that the market will be broadly in balance in 2025, compared with a previous estimate of a 300,000 bpd surplus.
The weakness in products yesterday was helped by signs of poorer manufacturing and services sector indexes. There are also more refineries coming online from maintenance which also helped pressure prices in yesterday’s early trading.
Fed President Raphael Bostic said the US monetary policy makers are under no pressure to lower interest rates since the economy and job market are both prospering.