Crude oil fell slightly on Wednesday, as investors wait for the outcome of the Federal Reserve two-day meeting later today. Today is Labor Day in Europe, so markets will be relatively quiet.
The Fed is not expected to change its monetary policy stance, as at its last meeting in March the U.S. central bank said it will keep the benchmark interest rate at a record low until unemployment falls below 6.5%.
Meanwhile, the unexpected slowdown in China’s manufacturing sector in April triggered fresh doubts about the strength of the economy. The figures follow data showing record unemployment in Europe and contraction in the U.S. Midwest business activity.
“Economic indices from China and Euro region have not been good, so improved data from those areas, especially Europe, would likely be needed to trigger a rebound in prices”, said Ken Hasegawa from Newedge Japan.
- Crude oil is trading around the $92.77 a barrel level, compared with the opening at $93.06, while the highest is at $93.23 and the lowest is at $92.53
- Brent is trading around $101.89 a barre,l after falling 0.47% or $0.48
Data from the American Petroleum Institute (API) showed that U.S. crude stockpiles rose by 5.2 million barrels, larger than a forecast of 1 million barrel increase. Later in the day, government figures are expected to show a gain of 1.1 million barrels.
“Crude prices are down today because of the big stock increase in the API and the worse-than-expected China PMI”, Hasegawa added.
Adding to the downside pressures is the increase in OPEC’s oil production to a five-month high due to the resolution of export disruptions in Iraq and Libya, and a rise in Iranian sales. Daily output increased in April by 194,000 barrels to 30.9 million barrels a day.
Starting tomorrow, markets will be closely watching the ECB’s rate decision, and on Friday the U.S. will release the key non-farm payrolls data that will offer more clues on the health of the world’s largest oil consumer.
- Natural gas is trading at $4.363 per cubic feet after rising 0.46%
- Gasoline is trading at $0.7874 a gallon after falling 0.52%
- Heating oil is trading at $2.8232 a gallon after falling 0.58%