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Crude oil lower as markets focus on Fed

Published 07/29/2013, 10:29 AM
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Investing.com - Crude oil futures remained lower on Monday, as comments by Saudi Prince Alwaleed bin Talal continued to weigh on prices, while investors eyed the Federal Reserve's upcoming policy statement for indications on the future of the central bank's stimulus program.

On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD104.33 a barrel during U.S. morning trade, down 0.35%.

The September contract settled down 0.75%, at USD104.13 a barrel on Wednesday.

Oil prices came under pressure after Alwaleed bin Talal said there is a "clear and increasing decline" in demand for crude oil from members of the Organization of Petroleum Exporting Countries, particularly Saudi Arabia.

In an open letter to Saudi Oil Minister Ali Al-Naimi, Prince Alwaleed bin Talal added that the kingdom won't be able to raise production capacity to 15 million barrels of crude a day as planned.

Saudi Arabia accounts for 12.9% of global oil production.

In the U.S., industry data earlier showed tha U.S. pending home sales fell 0.4% in June, less than the expected 1% decline, after a 5.8% rise the previous month.

The data came as markets were eyeing the Fed's upcoming policy meeting, after mixed U.S. economic reports last week fuelled further uncertainty over whether the central bank will soon begin to scale back its bond-buying program.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.

However, possible supply disruptions in the Middle-East still supported oil prices, after explosions rocked the eastern Libyan city of Benghazi on Sunday, while protests in Egypt fuelled worries the conflict may spill over into other countries in the region.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery fell 0.14% to trade at USD107.04 a barrel, with the spread between the Brent and crude contracts standing at USD2.71 a barrel.


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