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On April 30th, a research report from CICC stated that the Federal Reserve maintained interest rates unchanged at its April meeting, in line with market expectations. However, four officials voted against the inclusion of dovish language, three of whom opposed it, indicating a more cautious monetary policy stance. The high oil prices triggered by the US-Iran conflict, combined with the effects of previous tariffs, have complicated the inflationary environment. Supply shocks have shifted from occasional events to the new normal, meaning that the scope for policy easing is compressed, and the threshold for interest rate cuts will rise. This meeting was also Powells last at the helm of the Fed. Although his successor, Warsh, signaled a move towards "balance sheet reduction and interest rate cuts," the committees collective decision-making mechanism makes it difficult to push for rate cuts in the short term. We believe the likelihood of a Fed rate hike this year is low, but the path to rate cuts will be longer, with the next rate cut potentially postponed until the fourth quarter.Samsung Electronics: Investment in artificial intelligence infrastructure is expected to expand in the second quarter.Japans retail sales in March totaled 14.306 trillion yen, compared with 12.155 trillion yen in the previous month.April 30th - According to a document from the U.S. Court of International Trade, the first batch of refunds for tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) on imported goods will be issued around May 11th. The U.S. Supreme Court ruled on February 20th that the IEPA did not authorize the president to impose large-scale tariffs. On March 4th, a judge from the U.S. Court of International Trade ruled that Customs and Border Protection (CBP) could not impose tariffs under the IEPA during tariff settlements. This means that tariffs previously imposed under the IEPA must be refunded.Japans inventory levels fell 1.5% month-on-month in March, compared with 0.3% in the previous month.

Oil prices decline due to demand concerns; a Fed rate hike looms

Aria Thomas

Sep 21, 2022 10:28

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Wednesday oil prices declined as traders anticipated that a Federal Reserve interest rate hike would dampen oil consumption. Indications of a likely increase in U.S. gasoline stockpiles were also negative.


By 20:37 ET, Brent oil futures declined 0.6% to $90.37 per barrel and WTI futures declined 0.2% to $83.73 per barrel (00:37 GMT). Tuesday, both contracts dropped more than 1 percent.


On Wednesday, the Fed is poised to increase interest rates by at least 75 basis points. To combat inflation, the bank will hike interest rates for the eighth time this year.


The action will tighten monetary conditions in the United States, weighing on economic expansion and oil demand. High inflation and rising interest rates have a negative impact on the nation's oil consumption.


Dollar rose prior to the hike. A stronger dollar increases the cost of oil imports, hence decreasing global crude demand. A stronger dollar reduces crude demand in India and Indonesia.


The API statistics released on Tuesday suggested weak oil demand from U.S. consumers. Last week, the API reported that U.S. gasoline inventories increased by 3.2 million barrels.


Despite lowering gas prices, the estimate and data indicating a decline in U.S. vehicle traffic showed lackluster fuel consumption in the country.


Today's API statistics are a preview of the official EIA data. It is anticipated that gasoline inventories decreased by 0.4 million barrels last week.


Oil prices have declined significantly from their peaks during the Russia-Ukraine war due to expectations of a decline in demand. The continued depletion of the U.S. Strategic Petroleum Reserve has also contributed to price declines.


A harsh European winter could increase this year's heating oil use. As a result of U.S. sanctions on Russian oil, the supply should tighten, causing prices to rise.

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