Market sentiment was lifted modestly in the absence of very negative news. In the stock market, Wall Street advanced with the DJIA and the S&P 500 indices rose +0.58% and +0.37% respectively. In the commodity sector, crude oil gained although consolidation continued. The focus today is the FOMC meeting as the press conference will be held and the latest Fed official economic forecasts will be released.
A somehow mixed message will be sent after the FOMC meeting. While Fed Chairman Ben Bernanke and the post-meeting statement would focus on the softened macroeconomic data since the March meeting, the staff projections would likely show more hawkishness when compared with the previous projection in January. The Fed would retain the reference that the Fed funds rate would stay at exceptionally low level at least until mid-2014. At the press conference, the Chairman would possibly not hint the direction of the monetary policy. The statement would probably touch on the recent deterioration in Eurozone sovereign debt crisis. The reference that the 'strains in global financial markets have eased' might be removed and cautions would be made on the downside risks to the economic outlook due to the global financial markets. Some minor changes would be made on the economic developments in light the softening since the previous meeting. The decline in energy prices would also be addressed.
Tensions over Iran remained and the US and Europe planned new sanctions on the Middle East country's central bank so as to cut its oil revenue. As the EU has agreed to embargo purchases of Iranian crude from July, other countries are reported to have reduced oil imports from Iran. This includes China. China, Iran's top export destination of crude oil, halved its import from Iran in March. Yet, this is expected to be a matter of price negotiation instead of sanctions against Iran's nuclear development.
Concerning US oil inventory, the industry-sponsored API estimated that crude inventory fell -0.99 mmb in the week ended April 20 while gasoline and distillate fell -3.60 mmb each. The market anticipated that DOE/EIA to report a +1.50 mmb rise in crude inventory. Gasoline stock probably fell -0.50 mmb while distillate gained +0.08 mmb during the week.