IV:Crude oil fluctuates after China trade data; Fed uncertainty weighs
Investing.com - Crude oil futures swung between small gains and losses on Thursday, after the release of positive Chinese trade balance data, although ongoing uncertainty over the future of the Federal Reserve's stimulus program continued to weigh.
On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD104.21 a barrel during European morning trade, down 0.15%.
The September contract settled down 0.9% at USD104.37 a barrel on Wednesday, after hitting a one-week low of USD104.10 a barrel earlier in the session.
Oil futures were likely to find support at USD103.92 a barrel, the low from July 26 and resistance at USD107.23 a barrel, the high from August 6.
Market sentiment improved after official trade data released earlier showed that Chinese exports rose 5.1% from a year earlier in July, beating expectations for a 3% increase and following a 3.1% drop in June.
The data showed that imports surged 10.9%, blowing past forecasts for a 2.1% increase and following a 0.7% decline in June.
The country’s trade surplus narrowed to USD17.8 billion for the month from a surplus of USD27.1 billion in June.
The upbeat report eased concerns over a slowdown in the world’s second-largest economy.
Market players now looked ahead to a raft of Chinese economic data on Friday, including reports on inflation, industrial production and retail sales.
China is the world's second largest oil consumer after the U.S. and manufacturing numbers are used as indicators for fuel demand growth.
But investors remained cautious amid concerns the Federal Reserve may start to pull back its asset purchase program at its September meeting.
Cleveland Fed President Sandra Pianalto said Wednesday there has been “meaningful improvement” in the labor market and that tapering may be warranted if it continues to strengthen.
Her comments echoed similar remarks made by Chicago Fed President Charles Evans and Dallas Fed President Richard Fisher earlier in the week.
Market players awaited the release of a weekly report on U.S. initial jobless claims later in the trading day.
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.
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.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery inched down 0.1% to trade at USD107.32 a barrel, with the spread between the Brent and crude contracts standing at USD3.11 a barrel.
