Oil falls on Fed headlines, hedge fund rumors

Oil futures extended losses seen in U.S. trade Wednesday during Thursday’s Asian session as traders digested a couple of points of market speculation, neither of which is seen as healthy for oil’s near-term outlook. On the New York Mercantile Exchange, light, sweet crude futures for April delivery fell 0.52% to USD94.72 per barrel in Asian trading Thursday after losing 2.32% to settle at at USD94.85 a barrel in Wednesday’s U.S. session. That was good for oil’s biggest one-day drop this year. Oil and other dollar-denominated commodities were hit with a wave of selling after Federal Open Market Committee meeting minutes indicated the Federal Reserve may begin winding down or even cease its asset-buying programs. The Fed’s various easing endeavors have helped lift commodities prices, particularly gold and oil, over the past few years, but monetary easing has also punished the dollar. With some traders seeing an end to quantitative easing in sight, the trade appears to be dump commodities and run to the greenback. Meanwhile, the American Petroleum Institute said U.S. oil inventories increased by 3 million barrels last week. Gasoline and distillate inventories declined by 122,000 barrels and 1.6 million barrels, respectively. The U.S. Energy Information Administration releases its weekly inventory report later today. Traders also appeared to respond to rumors that a large hedge fund or a group of them had liquidated significant positions in oil and other commodities on Wednesday. Other speculation that crept into the market was the theory that Saudi Arabia, which has recently been paring oil production, may boost output during the second quarter to prevent prices from rising too rapidly. The kingdom is the largest producer in the Organization of Petroleum Exporting Countries. Elsewhere, Brent crude for April delivery fell 0.08% to USD114.97 per barrel.

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Courtesy: Investing.com