What's Moving the Oil Markets

•Crude futures were slightly higher in European morning trading as the market awaited the US Federal Reserve's interest rate decision later Tuesday, sources said. Market players were awaiting a Federal Reserve meeting on Tuesday, when the US central bank is expected to cut its key interest rate by at least 25 basis points from the current level of 4.5%, dealers said, with some also watching for a 50 bp cut, which could deepen the US currency's losses and boost oil prices. It would be the third cut to the benchmark Fed funds rate since September in response to the credit squeeze that has roiled world markets in recent months.

•The other main talking point has been the shift in the futures curve, with the backwardation weakening. On Monday, the January/February WTI spread settled at +9 cents, its lowest level since late August. "This is likely sending off signals of another build in crude stocks at Cushing, Oklahoma, at midweek," energy consultant Jim Ritterbusch wrote in a market report.

Updated: December 11, 2007