IV:Crude oil steady near 2-week high ahead of U.S. supply data
Investing.com - Crude oil futures were little changed near a two-week high during European morning hours on Wednesday, amid signs of progress by President Barack Obama and Republicans to reach a budget deal to avoid the looming fiscal cliff crisis.
Oil traders were also looked ahead to closely-watched weekly supply data on U.S. stockpiles of crude and refined products from the U.S. Energy Information Administration later in the day.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD88.39 a barrel during European morning trade, little changed on the day.
New York-traded oil prices held in a tight range between USD88.25 a barrel, the daily low and a session high of USD88.50 a barrel. Oil prices touched USD88.63 a barrel on Tuesday, the strongest level since December 5.
Market sentiment was boosted by hopes that an agreement to avoid the U.S. fiscal cliff can be reached ahead of the January 1 deadline.
Negotiations aimed at avoiding the automatic tax hikes and spending cuts which investors fear could derail the U.S. recovery, have intensified in recent days, raising hopes that U.S. lawmakers will reach an agreement by the end of the year.
President Barack Obama and House Speaker John Boehner showed Tuesday that they were willing to compromise on the level of annual income that could be subject to higher taxes.
President Obama said recently that any solution must include spending cuts and raising revenue, including increasing taxes on the wealthiest. Republican leaders say they will agree to higher revenue, but they want to close loopholes or reduce tax breaks rather than raise rates.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.1% to trade at 79.28, the lowest level since October 19.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Oil traders now looked ahead to weekly data from the U.S. government on oil supplies later in the day to gauge the strength of demand from the world’s largest oil consumer.
The report was expected to show that U.S. crude oil stockpiles declined by 1.12 million barrels last week, while gasoline inventories were forecast to rise by 1.84 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 4.1 million barrels last week, while gasoline stocks increased 4.18 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery eased up 0.05% to trade at USD108.91 a barrel, with the spread between the Brent and crude contracts standing at USD20.52 a barrel.
