Crude oil update before stock report and FOMC

In the below tweet from last week we highlighted the four consecutive sell-offs the weekly stock report had triggered. This was due to the counter-seasonal rise in crude and product stocks.  

However with the Federal Open Market Committee decision potentially being more important the market reaction to the report may end up being fairly muted. The FOMC decision is of a much bigger importance given its impact on the general level of risk appetite.  The recent improvement in global risk sentiment will need a dovish FOMC to be sustained.

The market has during the past month gone from expecting 50 bps cut to 100 bps cut over the next 12 months as US economic data continues to weaken. The result, should the FOMC fail to support this view, could be some painful adjustments across markets with dollar and short-term bond yields rising while stocks could suffer. All of these would be non-supportive for oil.