Federal Reserve Rates: The U.S. Federal Reserve held interest rates unchanged on Wednesday, maintaining its cautious stance amid persistent inflation pressures. While policymakers reaffirmed expectations for a total of 50 basis points in rate cuts by the end of 2025, consistent with projections made in March and December, they signaled a more gradual pace of easing beyond that, with only one 25 basis point cut anticipated in both 2026 and 2027. During his press conference, Chair Jerome Powell emphasized the continued resilience of the U.S. economy, pointing to a strong labor market with a 4.2% unemployment rate, improving consumer and business sentiment, and relatively contained inflation levels. The Fed remains committed to returning inflation to its 2% target over time, while navigating evolving economic and geopolitical risks.
EIA Stock Report: The latest oil inventory report revealed a larger-than-expected draw in U.S. crude stocks, totaling over 11 million barrels. Notably, approximately 75% of the draw occurred in PADD 3 (Gulf Coast), where a significant increase in exports and a decline in imports, falling below the year-to-date average, contributed to the reduction. Net U.S. crude imports declined by 1.8 million barrels per day (bpd), reaching 1.1 million bpd, while exports rose by 1.1 million bpd to 4.4 million bpd. This uptick in exports occurred despite a narrowing in the Brent - WTI futures spread, a trend that typically acts as a deterrent to U.S. crude exports. On the refined products side, inventories for both gasoline and distillates posted modest builds of 209,000 bbls and 514,000 bbls respectively. The increases were concentrated in PADD 3 (Gulf Coast), PADD 4 (Rocky Mountains), and PADD 5 (West Coast).
U.S. Jobless Claims: Initial unemployment claims decreased slightly last week, though they continue to hover near historically low levels. For the week ending June 14, claims totaled 245,000, a decline of 5,000 from the previous week. However, the prior week's figure was revised upward by 2,000, from 248,000 to 250,000. The four-week moving average rose to 245,500, an increase of 4,750 from the revised average of the previous week. This marks the highest level for the average since August 19, 2023. While claims remain relatively low by historical standards, they have trended toward the higher end of the recent range in recent weeks, adding to signs that the U.S. labor market is cooling after an extended period of robust hiring. So far in 2025, employers have added an average of 124,000 jobs per month, a slowdown from 168,000 in 2024 and significantly below the nearly 400,000 monthly average seen from 2021 through 2023.
Market Overview: Oil prices are trending higher this morning amid mixed signals being assessed by the markets. According to a Bloomberg report, senior U.S. officials are reportedly preparing for a potential strike on Iran in the coming days, however, the White House has provided limited clarity on whether the U.S. would support an attack on Tehran’s nuclear facilities. President Trump, who has consistently advocated for avoiding foreign entanglements, told reporters on Wednesday that he has not yet made a decision regarding potential U.S. involvement in Israel's military actions against Iran. a definite main concern for the oil market remains the Strait of Hormuz, a vital route for a fifth of global crude.
The RBOB futures have been moving higher this week, however the upside momentum has not been as strong as the WTI and Heating Oil futures. Gasoline demand has recently surged to around 9.2 million barrels per day, a significant increase of more than 900,000 bpd compared to previous weeks. This uptick is attributed to the onset of the summer driving season, characterized by higher travel volumes and increased fuel consumption. Fortunately, refinery utilization is running at just over 93%, indicating that refineries are operating at near full capacity to meet the heightened demand. This operational increase aligns with the seasonal demand spike. The first level of support is the 10 day moving average of $2.1933 and the second is the 62% retracement value of $2.1730. The first level of resistance is $2.3441, with the second at $2.4400.
Oil markets remain highly sensitive to escalating tensions between Israel and Iran. Traders are increasingly concerned about the potential disruption to oil exports, especially through the Strait of Hormuz, a critical bottleneck through which 20% of global oil passes. Even without physical disruption, risk premiums are pushing prices higher. Volatility is likely to continue, driven by geopolitical headlines and any physical threats to supply routes.
With today being a Federal Holiday, there were no official closes - below are the closes from yesterday. Markets will re-open at 5:00pm, and normal trading will resume tomorrow.
