Crude dips as Fed officials downplay talk of prolonged stimulus

Investing.com - Oil prices edged lower in Asian trading on Friday, giving back earlier gains after Federal Reserve officials downplayed the possibilities that weak economic indicators may prompt the U.S. central bank to keep monetary stimulus programs in play for longer than once anticipated.

On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded down 0.10% at USD95.06 a barrel on Friday, off from a session high of USD95.20 and up from an earlier session low of USD95.03.

Oil rose in earlier sessions after weak economic indicators sparked talk that U.S. stimulus measures will stick around for a while

Monetary stimulus tools tend to weaken the greenback and make oil a nicely priced asset in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

The Federal Reserve Bank of Philadelphia reported earlier that its manufacturing index fell to -5.2 in May from 1.3 in April.

Analysts were expecting the index to improve to a reading of 2.4 in May.

Elsewhere, the Department of Labor said earlier Thursday that the number of individuals filing for initial unemployment assistance in the U.S. rose by 32,000 to 360,000 last week, well above expectations for an increase of 2,000 to 330,000.

Soft inflation data also fueled talk of loose policies staying in place.

The country's consumer price index fell 0.4% in April from March, worse than expectations for a 0.2% decline, down for the second consecutive month.

Year-on-year inflation rates in the U.S. came to 1.1%, just shy of market expectations for a 1.3% reading and well below the Federal Reserve's 2% target.

Housing industry data dampened spirits as well.

The Commerce Department said the number of building permits issued in the U.S. rose 14.3% to 1.017 million units in April, well above expectations for a 6.2% increase to 945,000 units.

U.S. housing starts fell by 16.5% last month to 853,000 units, outpacing expectations for a decline of 4.9% to 973,000.

The numbers sent oil rising until Federal Reserve Bank of San Francisco President John Williams suggested earlier that despite hit-or-miss economic indicators, monetary authorities may begin to scale back the program later this year.

Philadelphia Fed President Charles Plosser, a known inflation hawk, added separately that the Fed should consider scaling back the program next month.

Elsewhere on the ICE Futures Exchange, Brent oil futures for July delivery were up 0.08% at USD103.75 a barrel, up USD8.69 from its U.S. counterpart.

Markets will keep an eye out for machinery order data due out later Friday.