Oil inter-market: The calm before the storm?

Oil stalled its bullish momentum and now trades around a flat-line on Wednesday, after having reached fresh multi-month tops earlier this week on renewed optimism, after Russia’s Putin said that Russia will join OPEC in cutting output.

Oil prices snapped previous losses and ticked higher on Wednesday, with investors expectant of some positive news ahead of the OPEC and Russia unofficial output curb talks in Istanbul today.

However, the risk remains to the downside as the US dollar is expected to resume its bullish momentum backed by increased odds of a Dec Fed rate hike, which pushed the treasury yields higher across the curve. The CME Fed watch tool shows that the probability of a Dec Fed rate hike now stands at 63%.

Moreover, extension of gains in the VIX (CBOE Volatility Index) futures, risk barometer, suggests risk-off persists at full swing, which weighs on the risky assets such as equities, oil etc.  Also, oil traders remain on the back foot ahead of the weekly API crude stockpiles report due later in the NA session.