S&P Global Platts says analysts expected oil inventories to grow and gasoline stockpiles to shrink by a smaller amount. Benchmark U.S. crude added 84 cents, or 1.9 percent, to $44.89 a barrel in NY. Brent crude, used to price worldwide oils, fell 44 cents to $47.77 a barrel.
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The Federal Reserve said the economy has gotten a bit stronger after some shaky results in the spring, and that the argument for raising interest rates has also gotten stronger.
The bank left the benchmark federal funds rate at an ultra-low 0.25-0.50 percent, still above the negative rates of the European and Japanese central banks but well below what the Fed itself had envisioned at the beginning of 2016.
Traders generally had not expected the Fed to raise rates, with bets before the meeting of only an 18 percent chance of a hike, according to the CME FedWatch website.
The US dollar was kicked in the teeth by the FOMC statement and its projections: 88% of the market patted themselves on the back for guessing correctly that the Fed would leave rates unchanged. All wanted the Fed to raise its key rate at this meeting. For several days stocks made big moves up and down as investors wondered if that would happen.
For the first time in almost two years and for the first time since Yellen became Fed chair in February 2015, there were three dissents to the Fed’s statement. Raghuram Rajan, whose term as the RBI chief ended early this month, had steadfastly refused to lower rates during the last few monetary reviews. The committee does have a meeting in November just before the presidential election, but a rate hike seems highly unlikely because it might be seen as affecting the vote.
The Fed, however, signaled it could still tighten monetary policy by the end of this year as the labour market improved further.
That move came despite reports on Wednesday that the country’s unemployment rate rose to its highest level in 20 years.
The decision suggests the Fed believes the USA economy has sailed safely through headwinds that anxious officials earlier this year, including possible damage from Great Britain’s vote to exit the European Union.
Software maker Adobe Systems climbed after it raised its forecasts for the year. The stock rose $11.28, or 6.9 percent, to $173.93.
Asian shares held near 14-month highs on Friday on revived bets the Federal Reserve is settling into a phase of very gradual interest rate rises while Japanese bond yields fell after the Bank of Japan’s new policy scheme.
While the risks to economic outlook were roughly “balanced”, the Fed maintained rates as inflation continued to run below its 2 percent target and members saw room for improvement in the labor market.
Now as that realization sinks in, are “central banks willing to continue easing?”
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The yen stepped back to 101.10 to the dollar from a four-week high of 100.10 touched on Thursday after Japan’s top currency diplomat warned Tokyo will take action if needed.
