Crude Oil sees little change after Fed hold as Iran considers a Qatari deal

WTI holds near $102.00 after rising from below $100.00, with little reaction to the Fed's decision to keep rates unchanged.
US Crude Oil inventories declined by 1.9 million barrels, while gasoline stocks increased by 3.9 million.
A response from Iran to Qatar's draft agreement to end the war is expected by Friday.

WTI showed little reaction to the Fed statement, trading around $102.00 and below its pre-decision session peak of just under $103.00. For Crude Oil, Qatar's draft agreement to end the war carries more weight than the Fed's decision to leave rates unchanged. Iran is expected to respond to the proposal before the weekend.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

After Qatari mediators handed Iran the draft, an official told Reuters on Wednesday that Tehran was considering the proposal. Separately, The Wall Street Journal reported that Washington had asked Gulf states to prepare for a possible resumption of the US campaign against Iran after the November 3 midterms. Both scenarios would alter the volume of Gulf Crude Oil available to buyers, influencing the supply backdrop against which WTI is priced.

US Crude Oil inventories, which underpin WTI, declined by 1.9 million barrels in the week to October 23, according to the Energy Information Administration (EIA). Gasoline inventories, by contrast, increased by 3.9 million barrels. A 5.2% decline in global supply in 2026 is expected by the World Bank, marking the largest fall in over four decades apart from 2020. Also on Wednesday, Abu Dhabi National Oil Company (ADNOC) informed customers that its pipeline bypassing the Strait of Hormuz would start operating in early 2027.

What is next on the calendar?

With no specific day confirmed, Tehran is expected to respond to Qatar's draft before the weekend. The key indicator this week of the US demand underpinning WTI will be Thursday's advance estimate of third-quarter US Gross Domestic Product (GDP), due at 12:30 GMT.

At 18:30 GMT on Wednesday, Fed Chair Warsh's press conference will mark his first public remarks since Fed officials entered their quiet period on October 17. A day before that period began, he described inflation as uncomfortably high. His assessment of whether energy costs are feeding into other prices will have implications for a December rate hike, which would weigh on that same US demand.

What do the charts indicate?

After opening Wednesday just below $100.00, WTI advanced through most of the session. The bars following the EIA release showed one of its larger upward moves. Before the Fed decision, however, a single five-minute bar erased more than half of the gains made since that report. Intraday momentum has moved higher from close to oversold territory.

WTI spot: 5-minute chart

Interest rates: frequently asked questions

How do interest rates work?

For borrowers, interest rates determine the charges financial institutions levy on loans; for savers and depositors, they determine the interest paid on their money. These rates are influenced by base lending rates, which central banks adjust in response to economic developments. Ensuring price stability is normally part of a central bank's mandate, usually through a core inflation target of around 2%. When inflation drops below target, a central bank may lower base lending rates to encourage lending and support economic activity. Conversely, inflation substantially above 2% normally prompts an increase in base lending rates to bring price pressures down.

Why do interest rates affect currencies?

By making a country more attractive to global investors looking to place their funds, higher interest rates generally support its currency.

Why does Gold respond to interest rates?

Holding Gold rather than an interest-bearing asset or a bank deposit carries a higher opportunity cost when interest rates rise. Higher rates therefore generally put pressure on Gold prices. High interest rates also usually strengthen the US Dollar (USD). As Gold is priced in Dollars, this tends to push its price lower.

How is the Fed funds rate defined?

US banks lend to one another overnight at the Fed funds rate. Set by the Federal Reserve at its FOMC meetings, this is the headline rate commonly cited in reports. Although it is expressed as a range, such as 4.75%-5.00%, the figure usually quoted is the upper bound, in this example 5.00%. The CME FedWatch tool tracks market expectations for the future Fed funds rate. These expectations influence behaviour across many financial markets ahead of Federal Reserve monetary policy decisions.

Crude Oil sees little change after Fed hold as Iran considers a Qatari deal

What is next on the calendar?

What do the charts indicate?

WTI spot: 5-minute chart