Oil futures held soft gains early Wednesday as anticipated key US data and the Federal Reserve`s decision on US monetary policy for the next price direction.
Oil markets received a boost after data from American Institute of Petroleum (API) on Tuesday showed larger-than-expected decrease in oil inventories; about 4.4 million barrels in the week ending July 25, bringing the total stocks at 369.4 million barrels.
Over the past days, prices were experiencing a significant decline to near breaking levels of $100 a barrel, amid weak demand for oil in Europe and Asia with ample supplies in the Atlantic region, overshadowing the geopolitical tensions in both the Middle East and Ukraine.
On Wednesday, the FOMC will announce the rate decision for July, with expectations to keep the benchmark interest rate at a record-low 0.25%, as well as the completion of the Federal withdrawals for the quantitative easing policy, bringing down the program to $35 billion $25 billion.
The QE3 program will be reduced by buying government bonds to 15 billion dollars from 20 billion, with a reduction of real estate-backed bond program to $10 billion from $15 billion. The Fed is expected to continue withdrawals until October 2014 amid growing expectations that the US central bank will hike the interest rates earlier than expected.
The US jobs report, due to be released Friday, is expected to indicate more evidence on the health of the US labor market, which has recently witnessed a remarkable development after a very low unemployment rate, expected to stay at 6.1% in July, while the consensus are calling for 225-thousand gain in non-farm payrolls this month, from the previous increase of 288 thousand.
The Dollar Index, which measures the performance of the dollar against a basket of major currencies, rose for the seventh day in a row reaching levels of 81.37, compared with the opening level at 81.29.
On the oil markets, West Texas Intermediate for September delivery traded around the levels of $101.57 a barrel, from an opening price of $101.00 a barrel, setting the highest level at $101.58 a barrel and the lowest at $100.84 a barrel.
As for the European benchmark for crude oil, Brent fell 0.06% to trade in a rangebound around the levels of $107.66 a barrel.