Investing.com - Crude oil futures gave back some of the previous session’s sharp gains in quiet trade during U.S. morning hours on Wednesday, as investors continued to monitor escalating geopolitical tensions between Iran and the West.
Some profit taking ahead of monetary policy decisions from the European Central Bank and the Bank of England on Thursday weighed.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD87.06 a barrel during U.S. morning trade, shedding 0.65%.
It earlier fell by as much as 1.3% to trade at a session low of USD86.51 a barrel. Prices hit USD88.01 a barrel on Tuesday, the highest since May 31.
Trade volumes were expected to remain light on Wednesday, with NYMEX floor trading and U.S. equity markets closed for the Independence Day holiday.
New York-traded crude prices surged by nearly 5% on Tuesday as oil traders renewed their focus on lingering tensions between Iran and the West.
Media outlets in Tehran reported that Iran had successfully tested medium-range missiles capable of hitting Israel in response to threats of military action against the country.
Meanwhile, Iran's National Security and Foreign Policy Committee drafted a bill Monday proposing to block the Strait of Hormuz for oil tankers in response to a European Union oil embargo on imports from Iran, which started on July 1.
The Strait of Hormuz, located between Iran and Oman, is one of the most important oil-shipping channels in the world, handling about 33% of all ocean-borne traded oil, according to the U.S. Energy Information Administration.
U.S. oil prices hit a high of USD110.53 on March 1, at a time when tensions over Iran's nuclear program were running high.
Meanwhile, investors were awaiting the outcome of the European Central Bank’s policy meeting on Thursday, amid growing expectations for a rate cut to help bolster growth in the euro zone, following a recent string of weak economic data.
Earlier in the day, the final reading of the euro zone services purchasing managers’ index came in at 47.1 in June, slightly above the preliminary estimate of 46.8, but still below the 50 level which separates contraction from growth.
Markets were also eyeing Friday’s U.S. nonfarm payrolls report, amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the ongoing crisis in the euro zone.
Oil traders were also looking ahead to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products due out on Thursday, a day later than usual due to the Fourth of July holiday.
The report was expected to show that U.S. crude oil stockpiles fell by 2.2 million barrels last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories dropped by 3.0 million barrels last week, compared to expectations for a decline of 1.9 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery slumped 0.7% to trade at 99.95 a barrel, with the spread between the Brent and crude contracts standing at USD12.89.
London-traded Brent prices rallied to USD101.56 a barrel on Tuesday, the highest since June 11.
Brent prices have been well-supported in recent sessions amid concerns over a disruption to supplies from Norway, the world's eighth largest oil exporter.
Some profit taking ahead of monetary policy decisions from the European Central Bank and the Bank of England on Thursday weighed.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD87.06 a barrel during U.S. morning trade, shedding 0.65%.
It earlier fell by as much as 1.3% to trade at a session low of USD86.51 a barrel. Prices hit USD88.01 a barrel on Tuesday, the highest since May 31.
Trade volumes were expected to remain light on Wednesday, with NYMEX floor trading and U.S. equity markets closed for the Independence Day holiday.
New York-traded crude prices surged by nearly 5% on Tuesday as oil traders renewed their focus on lingering tensions between Iran and the West.
Media outlets in Tehran reported that Iran had successfully tested medium-range missiles capable of hitting Israel in response to threats of military action against the country.
Meanwhile, Iran's National Security and Foreign Policy Committee drafted a bill Monday proposing to block the Strait of Hormuz for oil tankers in response to a European Union oil embargo on imports from Iran, which started on July 1.
The Strait of Hormuz, located between Iran and Oman, is one of the most important oil-shipping channels in the world, handling about 33% of all ocean-borne traded oil, according to the U.S. Energy Information Administration.
U.S. oil prices hit a high of USD110.53 on March 1, at a time when tensions over Iran's nuclear program were running high.
Meanwhile, investors were awaiting the outcome of the European Central Bank’s policy meeting on Thursday, amid growing expectations for a rate cut to help bolster growth in the euro zone, following a recent string of weak economic data.
Earlier in the day, the final reading of the euro zone services purchasing managers’ index came in at 47.1 in June, slightly above the preliminary estimate of 46.8, but still below the 50 level which separates contraction from growth.
Markets were also eyeing Friday’s U.S. nonfarm payrolls report, amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the ongoing crisis in the euro zone.
Oil traders were also looking ahead to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products due out on Thursday, a day later than usual due to the Fourth of July holiday.
The report was expected to show that U.S. crude oil stockpiles fell by 2.2 million barrels last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories dropped by 3.0 million barrels last week, compared to expectations for a decline of 1.9 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery slumped 0.7% to trade at 99.95 a barrel, with the spread between the Brent and crude contracts standing at USD12.89.
London-traded Brent prices rallied to USD101.56 a barrel on Tuesday, the highest since June 11.
Brent prices have been well-supported in recent sessions amid concerns over a disruption to supplies from Norway, the world's eighth largest oil exporter.