Cyprus Declines Bailout: Crude Below $93.00, Eyes On FOMC

Crude oil recovered some of yesterday’s sharp losses, but remains below the $93.00 a barrel level as Cyprus rejected the bailout plan, pushing investors towards safe haven.

On Tuesday, Cyprus`s parliament rejected a proposed levy on bank deposits as a condition for a European bailout. The country’s finance minister Michael Sarris offered to resign, but the president refused to accept.

The U.S. dollar is trading around the 83.00 level, adding to the downside pressures on oil since it makes it more expensive.

Losses were capped by hopes that “the ultimate resolution to this current situation will involve the EU financial ministers backing down a bit”, said Ric Spooner from CMC Markets in Sydney.

- Crude oil is trading around the $92.75 a barrel level compared with the opening at $92.50; the highest is at $92.78 and the lowest is at $92.41

- Brent is trading around $107.91 a barrel after rising 0.43%

Meanwhile, caution is rising ahead of the outcome of the Federal Reserve`s two-day meeting on Wednesday, which could provide clues on whether the Fed will reduce stimulus or not. Any signs of a tighter monetary policy could strengthen the U.S. dollar.

Investors are also eyeing the weekly oil inventory data from the U.S. Energy Information Administration for clues on demand from the world`s largest oil consumer. Crude inventories are expected to have increased 2 million barrels.

- Natural gas is trading at $3.953 per cubic feet after falling 0.40%

- Heating oil is trading at $2.8706 a gallon after rising 0.23%

- Gasoline is trading at $3.0521 a gallon after rising 0.23%

Crude might enjoy some gains, due to the recent string of upbeat U.S. economic data that improved demand ooutlook. Yesterday, U.S. housing data showed a better than expected recovery in February.