Crude oil may extend its losses on Wednesday ahead of Bernanke`s testimony later in the day, as concerns over demand from the world`s top oil consumer were triggered following the unexpected rise in crude stockpiles last week.
Besides the housing and retail sales data set for later in the day from the U.S. and U.K., investors are waiting for Fed chief Bernanke`s testimony amid beliefs the bond-buying stimulus has further to run.
Adding to the downside pressures on oil was the report by the American Petroleum Institute released Tuesday, which showed that the U.S. crude oil stockpiles rose by 532,000 barrels last week although inventories were expected to drop.
The U.S. Energy Information Agency (EIA) will release its data on inventories later on Wednesday. The report may show that crude oil stockpiles fell by 1 million barrels last week, while gasoline inventories may have dropped by 300,000 barrels.
Adding to the worries over demand from the world`s top oil consumers was a report showing that China’s crude inventories rose 0.1% in April from a month earlier to 28.7 million metric tons, a three-month high. China accounted for 11% of global demand in 2011.
- Crude is trading around $95.80 a barrel, with the highest at $95.96 and the lowest at $95.51
- Brent is trading around $103.62 a barrel, at the timeof writing after falling 0.28% or $0.29
Some support however was provided by the confidence that returned to most Asian stock markets, after investors were reassured that global central banks would not reduce their economic stimulus programs too early.
The Bank of Japan kept monetary policy steady today and raised its assessment of the economy citing rising exports and solid demand. Later in the day, the Bank of England will publish minutes from this month`s Monetary Policy Committee meeting.
Investors will also be watching the European Council Summit in Brussels today, but the minutes of the last Fed meeting will be given most of the attention.
Meanwhile, the dollar’s movement may play a role in oil’s movement. The dollar index is trading around 83.55; oil tends to move inversely against the dollar as it reduces the appeal of the dollar dominated commodities.
- Natural gas is trading at $4.224 per cubic feet after rising 0.76%
- Gasoline is trading at $2.8245 a gallon after falling 0.75%
- Heating oil is trading at $2.9139 a gallon after falling 0.52%