News Column

Crude Oil Ends Below USD101 Ahead Of Supply Data, Fed Policy

July 29, 2014

WASHINGTON (Alliance News) - US crude oil ended lower for a second straight session on Tuesday, ahead of the Federal Reserve's rate decision and the official US crude oil inventory data.

The Federal Reserve, which concludes it two-day monetary policy meeting tomorrow, is widely expected to reduce its quantitative easing by USD10 billion, cutting the size of the bond buying program to USD25 billion per month.

Earlier this month, Chairman Janet Yellen in her testimony before the Senate Banking Committee, indicated the Fed may raise interest rates sooner than expected if the recovery in the US labor market is sustained.

The US Energy Information Administration will release its weekly crude oil inventory data on Wednesday, while the American Petroleum Institute will release its weekly oil report late today.

Meanwhile, traders continue to track developments in Ukraine and the Middle East. According to reports, Israel carried out 76 strikes since Monday, with Gaza's power plant being one of the targets.

In eastern Ukraine, pro-Russian rebels are in for a setback with tougher sanctions on Russia. News reports indicate the EU has agreed to a new set of sanctions on Russia, including limiting access to EU capital markets for Russian State-owned financial institutions and embargo on trade in arms.

Light Sweet Crude Oil futures for September delivery, the most actively traded contract, dropped USD0.70 or 0.7% to close at USD100.97 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for September delivery scaled a high of $ 101.83 a barrel intraday and a low of USD100.37.

On Monday, crude oil futures ended lower despite lingering concerns over the ongoing unrest in Ukraine and the Middle East. Weak demand for crude oil in Europe and Asia, coupled with excess supply in the US contributed to oil's decline.

The dollar index, which tracks the US unit against six major currencies, traded at 81.20 on Tuesday, up from its previous close of 81.01 late Monday in North American trade. The dollar scaled a high of 81.25 intraday and a low of 80.99.

The euro traded lower against the dollar at USD1.3411 on Tuesday, as compared to its previous close of USD1.3439 late Monday in North American trade. The euro scaled a high of USD1.3444 intraday and a low of USD1.3406.

In economic news from the US, the Conference Board said its consumer confidence index surged up to 90.9 in July from an upwardly revised 86.4 in June, reaching its highest level since hitting 95.2 in October 2007.

Economists had been expecting the index to inch up to a reading of 85.4 from the 85.2 originally reported for the previous month.

Meanwhile, home prices in major US metropolitan areas continued to increase at a slower pace in May, Standard & Poor's report showed. The S&P/Case-Shiller 20-City Composite Home Price Index increased at an annual rate of 9.3% in May compared to the 10.8% growth reported for April. Economists expected a more modest slowdown to an annual rate of 9.9%.

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Source: Alliance News

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