Markets wait on Fed action, inventories secondary

Global equities rallied the most ahead of the announcement of the FOMC meeting as shown in the EMI Global Equity Index table below. The Index gained a little over 1% over the last twenty four hours widening the year to date gain to 2.2%. Eight of the ten bourses are now in positive territory for the year. Germany remains at the top of the leader board with the Paris CAC 40 holding the bottom spot. For the moment global equities remain a positive price driver for oil and the boarder commodity complex.

The API report showed a surprise draw in crude oil versus an expectation for a build and a surprise draw in distillate stocks along with a build in gasoline inventories within the expectations. The API reported a draw (of about 0.6 million barrels) in crude oil stocks and outside the expectation range as crude oil imports decreased while refinery run rates increased by 2.4%. The API reported a modest build in gasoline stocks. They also reported a surprise draw in distillate stocks versus an expectation for a more seasonal build in distillate fuel inventories.

The report is bullish for distillate, neutral for crude oil and bearish for gasoline. The market has not reacted strongly in overnight trading but has been stabilizing for all commodities in the complex ahead of the FOMC meeting announcement today.  The market is always cautious on trading on the API report and prefers to wait for the more widely watched EIA report due out this morning at 10:30 AM. The API reported a draw of about 0.6 million barrels of crude oil with a build of 1.7 million barrels in PADD 2 and a build of 0.625 million barrels in Cushing, Ok which is bullish for the Brent/WTI spread. On the week gasoline stocks increased by about 1.1 million barrels while distillate fuel stocks decreased by about 0.3 million barrels. 

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