Traders brace for report likely to show inventories increase
By Claudia Assis and Sara Sjolin, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures traded lower Wednesday, shedding some early strength after the Bank of Japan announced additional stimulus measures.
Crude for October delivery CLV2 -2.55% lost $1.67, or 1.8%, to $93.62 a barrel on New York Mercantile Exchange.
Prices ended at their lowest in nearly three weeks on the previous session, as investors continued to dissect a swift, sharp drop on the Monday session and worried about inventories levels.
The Bank of Japan unexpectedly increased the size of its asset purchases by 10 trillion yen ($126.7 billion) to about ¥80 trillion.
The bank said in a statement that the economic recovery had come to a pause and that economic activity was expected to “level off, more or less.” See: Bank of Japan adds to stimulus.
Commodities and other assets considered riskier rallied on the news initially, but mostly paused as it provided a boost for the dollar.
A stronger dollar is a negative for dollar-denominated commodities such as oil as it makes them more expensive for holders of other currencies.
The dollar also lost steam, however. The ICE dollar index DXY +0.12% , which measures the U.S. unit against a basket of six major global currencies, recently was at 79.275, up marginally from 79.226 in North American trading late Tuesday.
The dollar rose against the euro EURUSD -0.1115% after news reports that some German lawmakers may want to water down proposals for a European banking union and supervision of euro-zone banks. The euro traded at $1.3008, down from $1.3042 in North American trade late Tuesday. Read: Germany favors separate body for bank supervision
Meanwhile, the Energy Information Administration is scheduled to report on petroleum supplies later Wednesday.
Data released by the American Petroleum Institute late on Tuesday showed U.S. crude-oil inventories rose by 2.4 million barrels in the week ended Sept. 14. Analysts polled by Platts expect the EIA report to show a rise of 2.5 million barrels.
Saudi Arabia also captured oil investors’s attention on Wednesday. The country has offered customers in the U.S., Europe and Asia extra oil supplies to offset rising oil prices, the Financial Times reported, citing a senior Gulf-based oil official as saying “the current oil price is too high.”
“The country’s relatively pragmatic stance should alleviate some of the fears that the recent Fed action and geopolitics will kick-start a strong rally in the oil price, which could derail a forthcoming recovery,” analysts at Danske Bank said in a note.
Elsewhere in the energy complex, the October contract for gasoline RBV2 -1.98% turned lower as well, recently off 6 cents, or 2%, to $2.84 per gallon. Heating oil for delivery in the same month HOV2 -1.89% kept losses, down 6 cents, or 1.8%, to $3.07 a gallon recently.
October natural-gas futures NGV12 +2.27% bucked the trend, up 6 cents, or 2.3%, to $2.83 per million British thermal units.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Sara Sjolin is a MarketWatch reporter, based in London. V. Phani Kumar in Hong Kong contributed to this report.
