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Oil Spikes on Pipeline Closure; 2-Day Fed Meeting Kicks Off

Published December 12, 2017
  • Oil prices surged on supply concerns after the Forties pipeline, one of the UK’s largest, carrying ~40% of North Sea crude, was shutdown yesterday after a crack was discovered. The pipeline could take up to 3 weeks to repair. The pipeline’s owner, Ineos, said this would have a large impact on the industry, but not on consumers. WTI crude is up 0.67% to $58.38 with Brent crude up 0.90% to $65.27 at the time of writing.
  • USD/CAD is basically unchanged as markets await tomorrow’s Fed announcement. Though a rate hike has been 100% priced in, there is still the possibility of risk in either direction based on the tone of the rate announcement.
  • As market participants analyze tomorrow’s Fed statement for clues on the 2018 rate path, any commentary around a longer time frame for inflation to rebound or lower inflation forecasts in 2018 would be very dovish, while hawks are hoping for an optimistic assessment of growth and inflation.
  • Bank of Canada Governor Poloz also speaks this week, which has everyone on the edge of their seats, wondering if he will change gears again. Should we see positive employment data once the December books are closed, it will be more difficult to justify caution due to slack in the labour market.
  • In the UK, November CPI hit 5-year highs, increasing expectations (pressure) that the Bank of England will tighten policy and raise rates. The announcement will come on Thursday, December 14, 2017 at 7:00AM EST.