Today oil prices are down further on the EIA’s oil inventory report: Crude inventories climbed by 2.28 million barrels to 525.9 million barrels for the week that ended on August 26. That’s the highest seasonal level for crude stockpiles in more than two decades. Analysts surveyed by Bloomberg before the release of the report were looking for an increase in inventories of 1.3 million barrels
Two down days in a row–a big trend given the volatility in oil price trends recently. As of noon New York time on Tuesday, August 30, October futures for West Texas Intermediate, the U.S. benchmark, were down 1.28% to $46.38 a barrel. The selling comes as a Bloomberg survey showed that traders expect a climb in crude inventories of 1.5 million barrels in the U.S. EIA report due tomorrow.
So far the market believes the Fed was just bluffing in Jackson Hole speeches on September interest rate increase
Last week Federal Reserve chair Janet Yellen tried to convince financial markets in her speech at the Fed’s annual Jackson Hole get-together that an interest rate increase at the central bank’s September 21 meeting was still a possibility. But just as the market has brushed off earlier similar comments from the heads of the Atlanta and San Francisco Federal Reserve Banks, this week has opened with financial markets saying in essence No way
In the short term yesterday’s remarks from John Williams, head of the San Francisco Federal Reserve, were just another effort by Fed officials–including the heads of the Atlanta and New York banks, to keep the market from getting so comfortable with the idea that the Fed will stay on the sidelines that the U.S. central bank winds up with no room for an interest rate increase at any point in 2016–even in December.
It’s not just that the Federal Reserve is arguing about the timing of any interest rate increase. It’s also deeply divided on what facts should count in making that decision. That will make it hard for the Fed to move absent greater clarity on the economy–and that clarity is likely to be a long time coming.
The Federal Reserve is at it again. Today two high-profile Fed members, William Dudley, president of the New York Fed, and Dennis Lockhart, president of the Atlanta Fed, both talked up the odds for an interest rate increase as early as September and certainly sometime before the end of the year.