- Oil is trading nearly 3% higher this morning
- The market weighs the demand outlook following the Federal Reserve's third-consecutive interest rate hike of 75-basis-points
- Fed Chair Powell signaled even more aggressive hikes ahead
- The U.S dollar weakened relative to its recent highs
- Fed hiked interest rates by 75-basis-points yesterday and signaled that rate hikes will continue into 2023 (BBG)
- Officials lifted their target for the federal funds rate benchmark (short-term bank rate) to a range of 3% to 3.25%
- Rates are expected to reach 4.4% by the end of this year and 4.6% in 2023, according to officials, which is a more hawkish shift than anticipated in their dot plot
- Fed Chair Powell agreed that the median of the quarterly projections made by policymakers implied an additional 125 basis points of tightening this year
- He added that the main takeaway was that he and his colleagues were committed to bringing inflation down to the Fed's target of 2% and "will keep at it until the job is done"
- Increased rates are constraining by nature and are expected to have an adverse effect on consumer spending
- Signs of an economic slowdown are mounting, with U.S. gasoline and diesel demand falling to its lowest seasonal levels in more than a decade (BBG)
- Gasoline demand plunged to its lowest level for this time of year since 1997, according to the EIA's weekly statistics
- Distillate product supplied, a measure of diesel demand, is at its lowest since 2009
- The four-week average product supplied for both fuels—which measures the amount of product delivered to wholesale distributors—was below where it stood during the pandemic when lockdowns crippled economic activity