Oil reserves fell to a six-year low as analysts forecast revealed a fall on U.S. stockpiles. The fall happened even before the decision of the Federal Reserve for the monetary policy.
West Texas Intermediate crude dropped for a seventh day at 7 a.m. in New York. The pound declined to its weakest level since June 2010. Standard & Poor’s 500 Index futures and the Stoxx Europe 600 Index lost 0.3 percent. The Shanghai Composite Index jumped to its highest level since 2008 on bets the government will add stimulus.
Oil’s tumble back toward a bear market could exacerbate deflationary forces working against global central bank efforts to support prices. The Fed may cut a reference to being “patient” on rate rises in its policy statement, Morgan Stanley and BNP Paribas SA said, giving it flexibility on the timing of an interest rate increase. The British government announces its annual budget at 12:30 p.m. local time.
“All eyes are on the Fed today,” said Patrick Spencer, equities vice-chairman at Robert W. Baird & Co. in London. “Yellen will look at the strength of the dollar, the weakness of the global economy, drop the word ‘patience’ from her guidance, but give comfort that she won’t raise rates until it’s a requirement. The market will probably have a knee-jerk reaction either way.”