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Yesterday Brent added and WTI eased after U.S. inventories showed contradictory results.

Crude stockpiles dropped by 3.8 mln.b in the week up to June 19 exceeding market forecasts of a 1 mln.b drop.

However, at the beginning of summer holiday season petrol inventories increased by 3.9 mln.b as refinery utilisation climbed, and distillates stocks hitting 2.1 mln.b.

U.S. oil demand should rebound when the economy recovers, but crude oil imports may not resume growth as rapidly as they did when past recessions ended, government forecasters said on Wednesday.

New domestic petroleum supplies may minimize the need for more imports when the United States comes out of its economic downturn, the Energy Information Administration said.

The recent sharp rebound in oil prices appears to have been driven by speculative bets and is unlikely to be maintained without a recovery in real demand, the chief IMF economist said on Wednesday.

The Pound falls against the Dollar and the Euro after King's comments

The British Pound fell against the dollar and the euro on Wednesday after Bank of England Governor Mervyn King said he had serious concerns about how quickly the UK economy may recover.

During his testimony to the UK parliament, King also warned that a withdrawal of economic stimulus too quickly may create the risk of a renewed downturn, while keeping stimulus for too long may create inflation.

BOE chief economist Spencer Dale said on Tuesday it was too soon to judge the effectiveness of the central bank's programme to buy a target of 125 billion pounds in UK assets to help boost the economy, but that early signs were positive.

The GBP/USD is currently trading at $1.6330 as of 8:47am, London Time.

The greenback may decline against the Yen to 92.50 yen in two weeks after it fell below so- called support at 95.52 yen, Bank of Tokyo-Mitsubishi UFJ Lt. said, citing trading patterns.

The US Federal Reserve maintained the target range for the fed funds rate

The US Federal Reserve decided, as expected, to maintain the fed funds rate at the current target range of 0.00-0.25% and leave the size, timing and scope of its security purchase programmes unchanged.

However, even as it was stated that the fed funds rate will be kept at exceptionally low levels for an extended period, the FOMC statement was in general less dovish than we had expected (see Flash Comment – USA: Fed’s deflation fears are easing).

US bond yields rose following the statement, resulting in a slightly steeper yield curve and bond yields have continued marginally higher overnight.

The yield on two-year notes is now trading back above 1.20% and the yield on 10-year notes back above 3.70%.

Equity markets had rallied prior to the FOMC meeting on among other things a positive surprise to US durable goods orders in May and the S&P500 was up by as much as 1.8% early in the afternoon.

Euro / US Dollar

There is no change from yesterday as the key level remains intact.

“The poke above 1.4013 dampens confidence in the short term bearish count but does not invalidate it.

Staying below 1.4181 keeps the trend pointed down.

The series of lower highs and lows since 1.4340 may be a series of 1st and 2nd waves.

Under this scenario, the decline from 1.4014 a third of a third (powerful) wave decline.

It is also possible that the current decline is wave 4 of a diagonal from 1.2454 (alternate labels).