INV: Crude oil futures inch lower ahead of U.S. inventory report
Investing.com - Crude oil futures edged lower on Wednesday, as market players looked ahead to the release of key U.S. weekly supply data to gauge the strength of oil demand from the world’s largest consumer.
On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD105.18 a barrel during European morning trade, down 0.1%.
Nymex oil prices held in a range between USD105.04 a barrel, the daily low and a session high of USD105.81 a barrel.
Oil futures were likely to find support at USD103.92 a barrel, the low from July 26 and resistance at USD107.23 a barrel, Tuesday’s high.
The September contract settled down 1.2% at USD105.30 a barrel on Tuesday as investors re-examined expectations on how soon the Federal Reserve may start to pull back its asset purchase program following the release of upbeat trade data.
A government report showed that the U.S. trade deficit narrowed by 22.4% to a seasonally adjusted USD34.2 billion in June, the lowest level since October 2009.
Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Federal Reserve to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
Also Tuesday, Chicago Fed President Charles Evans said he expected the central bank to begin tapering its asset-purchase program by the end of the year.
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
Oil traders now looked ahead to data from the U.S. government on oil and fuel 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 1.2 million barrels last week, while gasoline inventories were forecast to fall by 0.8 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 3.7 million barrels last week, compared to expectations for a decline of 2 million barrels.
The API also said gasoline stockpiles decreased by 971,000 barrels, disappointing forecasts for a decline of 1 million barrels.
Market players also awaited data scheduled for later in the week on China’s trade balance as well as a report on inflation and industrial production, amid ongoing concerns over the Asian nation’s economic outlook.
China is the world's second largest oil consumer after the U.S. and manufacturing numbers are used as indicators for fuel demand growth.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery inched down 0.3% to trade at USD107.88 a barrel, with the spread between the Brent and crude contracts standing at USD2.70 a barrel.
