Crude prices was seen trading higher on Thursday, after the Federal Reserve (Fed) signaled that interest rates might increase in 2015 and government reports showed that crude inventories in Cushing dropped for a seventh week.
The North American WTI crude for April delivery advanced 0.14% higher trading at $99.31 per barrel on the New York Mercantile Exchange at the time of writing. While the European benchmark Brent crude added 0.14% to $106.00 per barrel at the same time.
On Wednesday, members of the FOMC said it will continue to monitor the growth of the economy to decide when to raise the interest rates, scrapping the pledge tying borrowing costs to a 6.5% unemployment rate.
“The market spilled on the prospect of rates being raised as early as March 2015; something none seem to be positioned for. The end of the asset-purchase program is open-ended and also open to interpretation. On current form, it could be completely unwound in October,” market strategist at IG Evan Lucas wrote in a note on Thursday.
“The market was also caught on the back-foot at the size of the rate rises, with the FOMC moving its medium expectations for the Fed funds rates from 0.75% to 1% by the end of 2015, and from 1.75% to 2.25% by the end of 2016. The market consensus before the meeting was for rates to be at 0.65% by the end of 2015,” he added.
Meanwhile supplies at Cushing, Oklahoma; declined by 989,000 barrels last week to 29.8 million barrels, the lowest since January 2012, reports from the Energy Information Administration confirmed.
The reports also showed that total crude inventories increased by 5.85 million barrels to 375.9 million, while the US crude production added 33,000 barrels a day to 8.22 million.
Distillate fuel supplies, including heating oil and diesel, declined 3.1 million barrels last week to 110.8 million, the least since May 2008, according to the EIA reports.
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