FRX: Crude oil turns lower after U.S. supply data; Fed, Libya in focus
Forexpros - Crude oil futures pulled back from a three-week high during U.S. morning hours on Wednesday, turning lower after a U.S. government report showed oil supplies rose unexpectedly last week.
Losses were limited after Germany’s constitutional court approved the ratification of the euro zone’s bailout fund and amid hopes of further easing from the U.S.
On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD96.97 a barrel during U.S. morning trade, shedding 0.2%.
Prices rose by as much as 0.9% earlier in the session to hit a daily high of USD98.06 a barrel, the strongest level since August 23.
Prices traded at USD97.28 a barrel prior to the release of the EIA data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 2 million barrels in the week ended September 7, defying expectations for a decline of 2.6 million barrels.
Total U.S. crude oil inventories stood at 359.1 million barrels as of last week.
Total motor gasoline inventories decreased by 1.2 million barrels, compared to expectations for a decline of 1.6 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Prices jumped to the highest levels of the session after Germany's Federal Constitutional Court rejected pleas to block the ratification of Europe's EUR500 billion permanent rescue fund, clearing the way for Germany’s president to ratify the ESM under certain conditions and allowing the European Central Bank’s bond purchasing program to proceed.
However, the judges attached various conditions to the ESM, saying the country’s liability to the fund must not exceed EUR190 billion without the approval of the lower house of parliament and said that both houses of parliament must be kept informed about decisions relating to the ESM.
Meanwhile, markets continued to eye the outcome of the Fed’s policy meeting on Thursday, amid fresh speculation that the U.S. central bank may announce a third round of bond purchases, or quantitative easing, to boost growth.
Market expectations of a QE3 announcement this week increased after last Friday’s weaker-than-expected jobs report and following a speech from Fed Chief Ben Bernanke at Jackson Hole last month.
Past monetary stimulus rounds weakened the U.S. dollar, boosting the price of dollar-denominated commodities like oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery added 0.3% to trade at USD115.11 a barrel, with the spread between the Brent and crude contracts standing at USD18.14 a barrel.
London-traded Brent prices drew support from reports that militants killed the U.S. ambassador to Libya and three other embassy staff in a rocket attack earlier in the day, refueling concerns over geopolitical risk.
