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First Look - Oil erases gains as Fed holds rates steady

Oil erased Wednesday’s gains on Fed’s decision to hold rates steady
- The WTI April contract, expiring on Thursday, traded at $67.13/Bbl (8:10 AM CT)
  - The more-active May contract was at $66.84/Bbl
- Federal Reserve Chair Jerome Powell downplayed concerns over economic growth and potential price impacts from President Trump’s trade war, suggesting the inflationary impact of tariffs is likely to be transitory
- US crude inventories rose by 1.8 MMBbls in the week ended March 14, while total US gasoline stocks fell by 500 MBbls, the lowest since the start of the year (EIA)
WTI options skew less bearish
- WTI and Brent second-month 25-delta put skew narrowed to the least bearish levels in a month (Bloomberg)
  - The 25-delta put skew measures the difference in implied volatility between out-of-the-money and at-the-money put options
- Brent $85 calls across different tenors were active on Thursday
- The Brent-Dubai EFS, the price spread between Brent and Dubai crude, turned negative, marking a rare premium for Middle East oil over the global benchmark

Natural gas is trading lower, with prices down about 10c
- The April Henry Hub contract is reversing some gains from yesterday after prices settled 26c higher (8:15 AM)
- Weather this month has so far been warmer than average, with Commodity Weather Group showing March 2025 as the fifth warmest of the past 25 years
- The EIA is expected to report a 5 Bcf build in inventories, according to the Bloomberg survey
  - This would be the first injection of the year, although the survey ranges from a low of -10 to a high of 12 Bcf
Trump repeals EPA rule meant to implement methane fee (S&P)
- President Trump has signed a congressional repeal of a Biden administration rule intended to implement a fee on methane emissions
- The rule would have placed a $1500/Mt fee on methane leaks in 2026 and beyond
- US producers have been critical of the potential methane fee, saying it would amount to a nationwide tax on natural gas