Crude dips as market awaits policies from upcoming Federal Reserve meet

Crude oil futures fell in Asian trading on Tuesday as investors sold the commodity for profits, cooling a recent rally that began after poor U.S. jobs data sparked talk the Federal Reserve will stimulate the economy via monetary stimulus measures. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD96.26 a barrel on Tuesday, down 0.29%, off from a session high of USD96.61 and up from an earlier session low of USD95.41. The U.S. Bureau of Labor Statistics reported Friday that the U.S. economy created a net 96,000 nonfarm payrolls in August, well below market calls for 125,000 jobs. The weak jobs numbers fueled already growing sentiment that the Federal Reserve will roll out a third round of quantitative easing at two-day monetary policy meeting that starts Wednesday. Under quantitative easing, the Fed buys assets such as Treasury holdings or mortgage-backed securities held by banks, pumping the economy full of fresh liquidity in a way that pushes down interest rates to encourage investing and hiring. Such accommodative policies tend to weaken the dollar by design and send commodities prices rising, especially oil, which shoots up on hopes for sustained demand that comes from a jolted economy and also due to a weaker dollar, which makes the commodity a nicely-priced asset in the eyes of investors holding other currencies. Oil, however, cooled its gains as investors jumped to the sidelines to await official word from the Federal Reserve. Meanwhile, investors also huddled on the sidelines to await a ruling from a German court, which is mulling whether participation in eurozone bailout activities violates the country's constitution. The court could unveil its ruling later this week, and uncertainty as to the ruling sparked some selling of the growth-sensitive commodity. On the ICE Futures Exchange, Brent oil futures for November delivery were down 0.17% and trading at USD114.12 a barrel, up USD17.86 from its U.S. counterpart.

Courtesy: ForexPros