Oil Futures Fall After the Fed Maintains Rates Steady


   
Maria Eugenia Garcia
DTN Energy Editor

   HOUSTON, TX (DTN) -- Oil futures dropped Wednesday following the Federal 
Reserve's decision to keep interest rates unchanged and despite the Energy 
Information Administration reporting a draw in U.S. commercial crude 
inventories for the previous week.

   The front-month NYMEX WTI futures contract fell by  $1.09 bbl to $58.00 bbl, 
and ICE Brent for July delivery dropped by $1.12 bbl to $61.03 bbl.

   June RBOB gasoline futures declined by $0.0403 to $2.0242 gallon, while the 
front-month ULSD futures contract decreased by  $0.0344 to $1.9744 gallon.

   The U.S. dollar index strengthened by 0.658 points to 99.705

   The bearish sentiment in the oil futures market was also supported by 
expectations of ample supplies, as OPEC+ countries have increased output in 
recent weeks.

   Eight OPEC+ countries over the weekend agreed on a 411,000-bpd production 
increase in June, in addition to the 2.2 million bpd released in early April.

   Meanwhile, U.S. commercial crude oil inventories, excluding the Strategic 
Petroleum Reserve, dropped by 2 million bbl to 438.4 million bbl last week, 7% 
below the five-year average for this time of year, according to data released 
by the U.S. Energy Information Administration on Wednesday morning. This figure 
was lower than the 4.48 million bbl draw reported by API yesterday (5/6) for 
the same reference week.

   The EIA reported that gasoline stocks rose by 200,000 bbl to 225.7 million 
in the week ending May 2. In contrast, the API reported a 1.97 million bbl draw 
for the same period.

   Distillate fuel stocks fell by 1.1 million bbl to 106.7 million bbl last 
week, according to EIA, which was lower than a 2.24 million bbl build reported 
by API for the same week.

   Separately, Fed Chair Jerome Powel reiterated today that the U.S. economy 
looks solid, and the Federal Reserve has decided to maintain its monetary 
policy unchanged with federal funds at a 4.25-4.50% range.

   Market participants will now focus on the conversations between U.S. and 
China officials scheduled for Thursday (5/8), during which they will discuss 
reciprocal trade tariffs imposed by both countries in recent week.

   U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson 
Greer are scheduled to meet with Chinese representatives in Switzerland. This 
will be the first official exchange on the topic of trade since the Trump 
administration imposed a total 145% trade tariff on imported Chinese goods, 
which China retaliated against with 125% tariffs on U.S. goods.

    




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