$58 WTI in intraday trading
Minutes from the Federal Reserve’s October 31-November 1 meeting were released today, giving information about a rate hike in December.
Bottom line: the Fed kept interest rates unchanged this meeting, but signaled a rate hike in December. “Many participants thought that another increase in the target range for the federal funds rate was likely to be warranted in the near term if incoming information left the medium-term outlook broadly unchanged,” according to the minutes.
Unemployment is at a 16-year low, but inflation remains below the Fed’s 2% target. Stubbornly low inflation continues to frustrate officials, as a tight employment market should result in rising prices and wages. Most of the members of the meeting agreed that tightness in the labor market should eventually begin to have an effect, fueling inflation in the medium term.
According to Bloomberg, a rate hike in December has been almost fully priced in, and market-implied odds of another increase by March are around 55%.
Oil
Oil prices rose today, breaching $58 WTI in intraday trading. WTI has risen by nearly $2 in the past two days, and is currently at 2-year highs. Brent also rose today, though not as sharply as WTI. Brent is now trading above $63 per barrel, near the 2-year peak of $64.27 reached earlier this month.
Oil prices have been buoyed by increasing confidence in an extension of OPEC cuts when the group meets on November 30. Current plans call for the cuts to expire at the end of March, but inventories will likely still be above five-year averages at that point, encouraging further restraint. A draw in U.S. crude inventories also helped boost WTI prices to levels not seen since 2015.
