Oil steadies below $70 ahead of EIA stocks data
Singapore, August 12, 2009
Oil steadied below $70 on Wednesday after four consecutive days of losses as the market waited for a second set of US inventory data and kept an eye on the outcome of the US Federal Reserve's two-day meeting.
Weekly stocks data from the American Petroleum Institute (API) showed an unexpected fall of 1.4 million barrels in crude stocks, together with a larger-than-expected 2.3 million barrels fall in gasoline stocks.
But the data, released after Tuesday's prices settlement, failed to lift the market, which tracked losses on equity markets after doubts over the strength of the US economic recovery resurfaced.
US light crude for September delivery rose 9 cents to $69.54 a barrel by 0223 GMT, having lost $1.15 on Tuesday on Wall Street losses and after the Energy Information Administration (EIA) revised lower its global oil demand forecast.
London Brent crude fell 6 cents to $72.40.
'Today traders will be watching the Fed meeting and the EIA data. The stronger dollar and waning sentiment for equities have been short-term bearish for crude, which has been trading as an asset class recently,' said Jonathan Kornafel, Asia director of US-based Hudson Capital Energy.
The Energy Information Administration (EIA) will release its own weekly inventory data at 1430 GMT.
Data from the EIA and API can diverge widely.
An expanded Reuters poll of analysts on Tuesday showed expectations of a 700,000 barrels rise in crude stocks, 1.3 million barrels increase in gasoline stocks and a 200,000 barrels drop in distillates stocks.
Traders will also keep a close eye on the two-day US Federal Reserve meeting that ends later on Wednesday with a statement expected at about 1815 GMT.
The Fed is expected to give a nod to signs the US recession is waning but will likely warn that the recovery will be slow and dampen any expectations it will soon start to raise interest rates.
Optimism after the US unemployment rate eased in July to 9.4 per cent from 9.5 per cent in June turned sour on Tuesday when the US Commerce Department reported that wholesale inventories plummeted 1.7 percent in June, and investors worried that businesses were running as lean as possible because of doubts about an economic recovery.
The decline, nearly double analyst expectations and the 10th straight monthly drop, pushed inventories to their lowest level in more than two years and weighed on US equity markets.
Adding to the gloom, the US Energy Information Administration cut its 2009 oil demand forecast, predicting consumption would fall by 1.71 million barrels per day this year, compared with previous estimates of a 1.56-million bpd drop.
On its part, the Organization of the Petroleum Exporting Countries anticipated that the slow recovery in global consumption and rival oil supplies would shrink demand for its crude next year.
Paris-based International Energy Agency (IEA) will release its closely watched oil monthly report later on Wednesday. – Reuters