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All eyes on Fed meeting

Published Tuesday, April 29th, 2014

The week kicked off with high-beta momentum shares coming under renewed pressure as investors expressed caution ahead of the US Federal Reserve’s policy meeting that is due to commence later today. Expectations are for a continuation in the $10bn pace of tapering but the focus will be on any further signals that might provide a gauge on the timetable for possible increases in interest rates.

Despite the volatile nature of the session, Wall St ended the day in positive territory as short-term sentiment gained support from on-going M&A activity and data pointing to rising US house sales. President Obama announced a new round of sanctions targeting Russian officials and companies but once again the markets were largely underwhelmed.

The lifting of the force majeure at the Libyan port of Zueitina was undoubtedly bearish for Brent which lost $1.46/bbl on the day whilst WTI closed 24cts/bbl higher. This strengthened the front-month WTI/Brent arbitrage by $1.70/bbl but it would be wrong to single out Brent as the only underperformer of the day. Both Heating Oil and RBOB lost nearly 350 points on the day. The strength in the arbitrage may have been due to profit-taking as the expected 1.9 million bbls build in US crude oil inventories this week could provide relative support for Brent at the expense of WTI unless Cushing stocks fall further.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.