LONDON—Crude-oil futures were mixed in subdued trade as investors waited for news about the U.S. Federal Reserve's plans regarding aid for the U.S. economy.
But although monetary stimulus would be bullish for oil prices, any potential action would come with a grim backdrop. The International Monetary Fund Tuesday cut its forecast for global growth and warned of "severe repercussions" for the global economy unless euro-zone nations strengthened their banking system and the U.S. got its fiscal affairs in order.
Mid morning, the front-month November contract on the New York Mercantile Exchange was trading down 45 cents, or 0.5%, at $86.47 a barrel. The front-month November Brent contract on London's ICE futures exchange was up 21 cents at $110.75 a barrel.
"As far as oil prices are concerned, the dismal IMF growth story points to lower oil prices. The potential stimulus story, on the other hand, points to higher prices as it will bring in speculative buying long before there is a growth effect," said PVM's David Hufton.
The U.S. Federal Open Market Committee, which sets monetary policy, is believed to be considering a proposal, called "Operation Twist," which aims to drive down long-term interest rates to spur greater capital investment and lending. A two-day meeting of the committee ends Wednesday; a statement on policy is expected later in the day.
Investors in the oil market are also contending with a confusing picture in terms of supply and demand, due to the unpredictability of when Libya can begin exporting significant volumes of crude oil and the potential for other members in the Organization of Petroleum Exporting Countries to rein in output when they do, Mr. Hufton added.
In the meantime, continued disruptions in the North Sea are further tightening oil supplies feeding into the Brent blend, the European benchmark grade, keeping Brent crude in steep backwardation—a phenomenon when oil costs more now than in the future.
Investors are also awaiting the weekly report from the Department of Energy on U.S. oil inventories.
Crude stockpiles are expected to have fallen by 900,000 barrels, according to the mean of 15 analyst forecasts gathered by Dow Jones Newswires.
The American Petroleum Institute reported late Tuesday that crude stocks rose by 2.574 million barrels for the week ended Sept. 16.
Mid morning, the ICE's gasoil contract for October delivery was down $4.50, or 0.5%, at $934.50 per metric ton, while Nymex gasoline for October delivery was up 92 points at $2.7106 per gallon.
Write to Selina Williams at selina.williams@dowjones.com
