Oil prices are moving lower after a surprise crude oil build reported by the API last evening as well as in anticipation of the U.S. Federal Reserve announcing an interest rate hike at the conclusion of their meeting today. In addition Bloomberg is reporting that China will suspend fuel price cuts while crude oil prices continue to decline in order to slow consumption and trim automobile emissions. The action by China certainly has a bearish overtone in that it would slow consumption growth that OPEC is counting on to absorb all of the potential additional oil from places like Iran, Iraq and even Libya.

The oil complex remains in the long term downtrend with bouts of short covering likely to emerge from time to time. The fundamentals still overwhelmingly point to the oversupply lasting well into 2016 and possibly beyond. Until there are clear signs that the global oil surplus is on a path to dissipating it will be very difficult for the oil complex to enter into a sustainable uptrend.

The U.S. Congress will vote on an Omnibus Bill that includes a provision to eliminate the ban on crude oil exports from the U.S. The current signs suggest this bill will pass. If so and if the President does not veto the bill the oil industry will then be able to export any U.S. crude oil grades with no special permission. As far as the impact on global oil prices I do not expect much of an effect on the flat price of oil as the U.S. is still a net importer of oil… unless of course U.S. production surges higher (very unlikely).