by Dr. Nancy Yamaguchi
WTI crude prices are back above $49/b this morning, after continuing to recover in early trading. WTI opened at $49.01/b today, up $0.25 from yesterday’s opening. Current prices are $49.27/b, an increase of $0.41 above yesterday’s closing price.
Diesel opened at $1.5133/gallon in today’s session. This was a small recovery of 0.15 cents (0.1%) from yesterday’s opening price. Current prices are $1.5198/gallon, up 0.74 cents from yesterday’s close.
Gasoline opened at $1.5895/gallon today, a drop of 1.34 cents, or 0.84%, from yesterday’s opening. Prices are $1.6028/gallon currently, up 1.94 cents from yesterday’s close.
The downward path for crude prices was halted first by reports from the API that crude, gasoline, and diesel stockpiles all had been drawn down during the week. Market confidence rose when the official EIA corroborated this, showing stock draws of 0.237 mmbbls crude, 3.055 mmbbls gasoline, and 4.229 mmbbls diesel. The crude stock draw was very small, but it came as a welcome surprise. The market had been expecting another build of 3 to 4 mmbbls. The small crude draw also had a psychological impact: until this week’s data, crude inventories had risen for nine consecutive weeks in 2017, and the non-SPR stockpile had reached a massive 528.4 mmbbls. Draining it to 528.2 mmbbls would be scarcely noticeable, save that it was a step in the right direction.
Federal Reserve Chair Janet Yellen held a press conference yesterday to present results from the March 14-15 Federal Open Market Committee (FOMC) meeting. As most economists had expected, the Fed raised interest rates by 0.25% (to 1.0%, from 0.75%.) The Fed moved quickly on this March rate hike, and many analysts interpreted this as a new, hawkish bent. The Fed’s message was consistent, however, and there was no hint at a hawkish change to the two additional rate increases that the Fed already indicated are likely for the year. Therefore, the market viewed the meeting as being more dovish than expected, and the U.S. Dollar index opened lower today. This has helped strengthen oil prices. Dr. Yellen summarized the Committee’s findings as simply as possible: “The simple message is the economy’s doing well. We have confidence in the robustness of the economy and its resilience to shocks,” she said.