Oil edges higher ahead of OPEC+ committee meeting, Fed decision

By William Watts

Oil futures edged higher Wednesday, finding support ahead of an OPEC+ committee meeting that’s expected to recommend no changes in output and ahead of the outcome of a Federal Reserve policy meeting.

Investors were also set to weigh official oil supply data after industry figures showed another large rise in U.S. crude inventories last week.

Price action

• West Texas Intermediate crude for March delivery CL00, 0.58% CL.1, +0.60% CLH23, +0.60% rose 42 cents, or 0.5%, to $79.29 a barrel on the New York Mercantile Exchange.
• April Brent crude BRN00, +0.33% BRNJ23, +0.33%, the global benchmark, was up 24 cents, or 0.3%, at $85.70 a barrel on ICE Futures Europe.
• March gasoline RBH23, -0.03% ticked down 0.1% to $2.564 a gallon, while March heating oil HOH23, -0.77% was off 0.2% at $3.14 a gallon.
• March natural gas NGH23, -0.45% was flat at $2.684 per million British thermal units.

Market drivers

An OPEC+ committee meeting Wednesday in Vienna was expected to recommend leaving the group’s crude output unchanged, The Wall Street Journal reported, citing delegates. Leaving output unchanged would allow the Organization of the Petroleum Exporting Countries and its Russia-led allies to assess how factors ranging from China’s lifting of COVID-19 restrictions to the European Union’s embargo on Russian crude and oil products will affect prices, the report said.

Meanwhile, the Federal Reserve was widely expected to raise the fed-funds rate by 25 basis points, or a quarter of a percentage point, when it concludes its first policy meeting of the year Wednesday afternoon. Fed Chair Jerome Powell is expected to push back against money-market expectations the central bank will look to cut rates before year-end.

See: Fed set to deliver quarter-point rate hike along with ‘one last hawkish sting in the tail’

“Last week oil prices held steady with prices spurting above the $80 range as the focus remained on China demand and the upcoming OPEC+ meeting. Nevertheless, while we remain bearish on oil prices in the near term, we see prices responding favorably to hints of the Fed tightening cycle nearing an end,” said Peter Cardillo, chief market economist at Spartan Capital, in a note.

“In other words, oil moving back up towards the high $80 range can’t be ruled out in the very short-term,” he wrote.

Supply data

The American Petroleum Institute, an industry trade group, late Tuesday reported a 6.3 million barrel rise in U.S. crude inventories last week, according to a source citing the data, while gasoline stocks rose 2.7 million barrels and distillate supplies increased 1.5 million barrels.

The Energy Information Administration’s official weekly tally is due Wednesday morning. Analysts surveyed by S&P Global Commodity Insight, on average, look for crude inventories to rise 300,000 barrels, while gasoline was expected to be flat and distillates down 1.3 million barrels.