Crude oil futures little changed as markets eye Fed

Crude oil futures were little changed during European morning hours on Thursday, as investors stuck to the sidelines ahead of a policy decision by the Federal Reserve later in the day. On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD97.03 a barrel during European morning trade, easing up 0.02%. Prices were stuck in a narrow trading range of USD96.76 a barrel, the daily low and a session high of USD97.14 a barrel. New York-traded crude futures hit a three-week high of USD98.05 a barrel on Wednesday. Market players eyed the outcome of the Fed’s two-day policy meeting later Thursday, amid growing speculation that the U.S. central bank may announce a third round of bond purchases, or quantitative easing, to boost sluggish growth in the world’s largest economy. 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. Oil prices drew further support from a weaker U.S. dollar. The euro held near a four-month high against the greenback after Germany’s constitutional court approved the country’s participation in the euro zone’s bailout fund, the European Stability Mechanism on Wednesday. The ruling cleared the way for Germany’s president to ratify the ESM under certain conditions, allowing the European Central Bank’s bond purchasing program to proceed. The German court said that the country’s liability to the EMS 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. But prices were weighed by a surprise increase in U.S. oil stockpiles. Weekly data from the U.S. Energy Department on Wednesday showed that crude oil supplies rose by 2 million barrels last week, defying expectations for a decline of 2.6 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 November delivery eased down 0.05% to trade at USD115.27 a barrel, with the spread between the Brent and crude contracts standing at USD18.24 a barrel. London-traded Brent prices hit USD115.99 a barrel on Wednesday, drawing support from from reports that militants killed the U.S. ambassador to Libya and three other embassy staff in a rocket attack, refueling concerns over geopolitical risk in the OPEC member.

Courtesy: ForexPros