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- Oil futures rose in thin Asian trade on Wednesday, with U.S. oil up more than $1, after breaking out of a month-long trading range on a forecast suggesting a global glut in supply may be easing. A jump in oil prices helped offset some concerns that China’s slowdown could lead to overcapacity in many industries, especially the resource sector. Crude futures prices broke out of month-old trading ranges, in part supported by news that non-OPEC producer Russia and key OPEC member Saudi Arabia discussed the oil market last week. The two countries plan to continue exchanging views on the oil market, Russian Energy Minister Alexander Novak told reporters. Oil traders were encouraged by expectations that the world’s two largest oil exporting countries may take measures to ease the supply glut, even though analysts have warned that their opposing positions over Syria could hamper cooperation. The American Petroleum Institute, an industry group, said late on Tuesday there was a weekly U.S. crude stockpile draw of 1.2 million barrels. Analysts polled by Reuters had forecast a second straight week of higher crude inventories. Global oil demand is expected to increase by the most in six years as supply from non-OPEC countries stalls, the EIA said in its Short Term Energy Outlook on Tuesday. U.S. production, which has surged in recent years and caused a roughly 50-percent decline in prices since June last year, is also starting to decline.
- The Bank of Japan kept monetary policy steady on Wednesday, preferring to save its limited options while hoping that a tight job market will lift wages and consumption enough to offset the pain from China’s economic slowdown. As widely expected, the BOJ reiterated its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen ($665 billion) through purchases of government bonds and risky assets. “Japan’s economy continues to recover moderately although exports and production have been affected by the slowdown in emerging economies,” the BOJ said in a statement, keeping its assessment of the economy unchanged from the previous month.
- The Federal Reserve should be communicating its views of the economy well enough that markets will not be taken by surprise by an eventual interest-rate hike, a top U.S. central banker said on Tuesday. While it is not a problem if traders are not fully pricing in a rate increase before it happens, “it shouldn’t be the case that no one is expecting a rate increase,” San Francisco Fed President John Williams told reporters after a speech here. The comments suggest that the Fed must do quite a bit of communicating if its officials are to feel comfortable raising rates this year, as Williams says he thinks will be appropriate. The Fed last month held off on raising interest rates, citing concerns about global risks and low inflation. Interest rates have been near zero for almost seven years now, and the last time the Fed raised rates was in 2006. Since the Fed’s September meeting, Williams said, there have been no signs of a worsening global outlook, and while recent trade data was worse than expected, data on consumer spending has topped his expectations.