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Crude oil steady in choppy trade as traders weigh demand prospects

Published 02/19/2013, 10:02 AM
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Investing.com - Crude oil futures were steady in choppy trade on Tuesday, as traders awaited further indications to gauge the strength of the global economy and the impact on future oil demand prospects.

On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD96.32 a barrel during U.S. morning trade, down 0.1% on the day.

New York-traded oil prices held in a range between USD96.92 a barrel, the daily high and a session low of USD95.81 a barrel.

Oil prices remained supported after a report showed that the ZEW index of German economic sentiment hit a 34-month high in February.

The ZEW Centre for Economic Research said that its index of German economic sentiment jumped to 48.2 in February, the highest since April 2010, from 31.2 in January, against expectations for a reading of 35.0.

Sentiment in the wider euro zone also hit a 34-month high in February, with the index of euro zone economic sentiment rising to 42.4 from 31.2 in January, better than forecasts for a reading of 35.5.

The upbeat data fuelled hopes that the region is making its way out of the ongoing debt crisis.

Gains were limited as market players remained wary ahead of the upcoming Italian general elections next week, amid concerns that a hung parliament could hamper ongoing efforts at economic reforms.

Signs of slowing global economic activity and the impact on future oil demand prospects further dampened the appeal of the commodity.

The International Energy Agency’s chief economist Fatih Birol warned earlier that high oil prices are restraining the global economy.

Data last week showed that the euro zone's economy contracted by 0.6% in the three months to December, compared to expectations for a 0.4% decline.

Also last week, official data showed that Japan’s economy contracted by 0.1% in the fourth quarter, compared to expectations for an uptick of 0.1%.

Oil traders now looked ahead to the release of the minutes of the Federal Reserve’s January meeting on Wednesday for hints regarding the central bank’s attitude towards monetary policy.

Any policy pause signal from the Fed minutes may send the U.S. dollar higher, pressuring dollar-denominated commodities.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery dipped 0.4% to trade at USD116.95 a barrel, with spread between the Brent and crude contracts contracting to USD20.63 a barrel.

Brent prices remained supported after a report Monday showed that oil shipments from top exporter Saudi Arabia declined for the third consecutive month in December to 7.06 million barrels per day, the lowest level in 15 months.

Market players are looking ahead to talks between Iran and major world powers scheduled for February 26 for signs of progress regarding Tehran's disputed nuclear program.

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