Crude Falls Second Day On U.S. Growth Worries

After U.S. Federal Reserve policy makers signaled through the FOMC minutes yesterday that they may end a stimulus program this year, worries over growth in the world’s biggest oil consumer were triggered, darkening the outlook for crude demand.

Moreover, investors lost their appetite for riskier assets as the budget battles in Washington may continue in the next two months as U.S. policy makers try to reach an agreement on the debt ceiling, adding to the downside pressures on oil prices.

Most people do not want to take further risks in equities and commodities if the QE (quantitative easing) program is not going to continue beyond 2013, said Tetsu Emori, from Astmax Investments in Tokyo.

Crude is losing the profits gained earlier this week when the U.S. Congress approved a deal that averted the fiscal cliff amid the uncertainties over growth and the rising caution ahead of the key nonfarm payroll data later today that shows the strength of the economy.

The U.S. economy is expected to add 145 thousand jobs in Dec., compared with 146 thousand jobs added in Nov. Moreover, the U.S. factory orders may rise at a slower pace in Nov. while the ISM services may fall to 54.3 in Dec. from 54.7 previous.

Energy investors will also be eyeing the oil inventories report from the Energy Information Administration (EIA) that is released on Friday instead of Wednesday due to the New Year day`s holiday. Stockpiles may fall by one million barrels to 370.1 million last week.

Adding to the downside pressures on crude prices was the dollar’s sharp rise. The greenback jumped above 80.50 today as demand on safe haven increased amid worries over the U.S. growth and doubts that U.S. lawmakers will manage to agree on the debt ceiling.

Crude is trading as of this writing around $92.20 a barrel compared with the opening at $92.83 and with the highest at $92.88 and the lowest at $92.13. Brent is trading as of this writing around the $111.48 after falling 0.59%.

Natural gas is trading around $3.208 per 1,000 cubic feet after rising 0.31%, while heating oil is trading around $3.008 after falling 0.57% and gasoline is trading around $2.7826 a barrel after falling 0.54%.