Oil volatile after large inventory draw; Markets await the Fed

Summary:

• Weekly crude oil inventories: -8.5M

• Oil drops lower after touching 2-week high

• Crypto newsletter: New regulations on the horizon

• FTSE pulls back from 11-month high

• Markets await Fed decision (7PM BST)

The weekly crude oil inventories have once more shown a sizable drop, with the release following in the footsteps of last night’s API number. A print of -8.5M means its now 7 consecutive weekly declines for this metric and the drop itself was larger than the consensus forecast (-2.5M) and also the API (-6.0M). Last week’s EIA number was -10.8M. 

The market reaction to what appears to be a positive number could be described as mixed, with Oil first surging to its highest level in 2 weeks near $65.50 before falling back and turning negative on the day. 

Our latest Crypto newsletter focuses on US Treasury Secretary Steve Mnuchin signalling new rules on cryptocurrencies, Blockchain.com moving into crypto trading and a Phillipines bank that has just conducted its first blockchain-based transaction. Read the post in full here. 

The UK blue-chip index has pulled back further after hitting it highest level since last August yesterday with the global equities in general trading a little tentatively ahead of this evening’s eagerly anticipated Fed rate decision. The US central bank are expected to cut rates for the first time in a decade later on, but given the high expectations amongst market participants there is plenty of scope to disappoint. The FTSE has dipped lower today and erased a fair chunk of the gains seen on Monday. Global risk sentiment, as dictated by the reaction to the Fed, and the strength of the Pound remain key drivers for the market. Monday’s swoon in Sterling contributed to the surge higher but as the currency has stabilised, the stock market has pulled back. 

It’s been a good afternoon for investors in Apple, with the stock gaining as much as 5% after the latest trading update was delivered last night. For the fiscal 3rd quarter ended June, Apple posted a 1% rise in revenue to $53.8B and a 7% drop in earnings per share to $2.18. Both of these reflect favourably compared to consensus analyst forecasts of $53.4B and $2.10 respectively and an optimistic outlook for the next quarter that predicts revenue above current forecasts have both contributed to the positivity surrounding the release. For the first time in 7 years iPhones sales dropped to less than 50% of revenue, but CEO Tim Cook put a positive spin on this claiming the change was a result of successfully diversifying away from a single product. 

Our preview of the Fed decision can be viewed here.