Oil declines ahead of U.S. supply data, Fed in focus
Investing.com - U.S. oil futures edged lower on Tuesday, as market players awaited key U.S. weekly supply data to gauge the strength of oil demand from the world’s largest consumer.
Investors also awaited the outcome of the Federal Reserve's two-day policy meeting on Wednesday.
On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in February traded at USD97.45 a barrel during European morning trade, down 0.35%. New York-traded oil futures held in a range between USD97.33 a barrel and USD97.72 a barrel.
Nymex oil futures were likely to find support at USD96.27 a barrel, the low from December 13 and resistance at USD98.17 a barrel, the high from December 12.
The February contract ended up 0.87% to settle at USD97.77 a barrel on Monday after upbeat manufacturing data out of the euro zone and the U.S. boosted optimism over the global economy.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 3.5 million barrels in the week ended December 13.
Traders have been concerned over rising U.S. inventories and increased production levels in recent weeks.
Investors remained cautious ahead of the outcome of the Fed’s two-day policy meeting on Wednesday, with some expecting the central bank to announce a small reduction in the pace of its USD85 billion-a-month asset purchase program.
Markets were turning their attention to U.S. inflation data due out later in the session amid concerns that the subdued inflation outlook could prompt the Fed to keep its stimulus program in place for longer.
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.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for February delivery shed 0.25% to trade at USD109.16 a barrel, while the spread between the Brent and U.S. crude contracts stood at USD11.71 a barrel.
London-traded Brent prices rallied 1.01% on Monday to settle at USD109.41 a barrel amid renewed concerns over a disruption to supplies Libya.