Crude drops on U.S. monetary policy uncertainty
Published Aug 08, 2013 01:09PM ET
Federal Reserve stimulus programs such as monthly bond purchases push down interest rates to drive recovery, weakening the greenback in the process and making oil an attractive buy in dollar-denominated commodities exchanges.
Talk of an end to stimulus tends to have the reverse effect.
On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD102.80 a barrel during U.S. trading, down 1.50%.
The September contract settled down 0.9% at USD104.37 a barrel on Wednesday.
Lackluster but not dismal economic indicators in the U.S. have many investors guessing when the Fed will announce plans to taper stimulus measures that have supported oil prices in recent years, though on Thursday, investors sold the commodity on sentiments that a decision is only a matter of months.
Several Federal Reserve officials have said in recent days that they could not rule out making a decision to taper stimulus measures at the bank’s September meeting, though lackluster economic indicators out of the U.S. have some market participants betting that such a decision will come in December.
Either way, stimulus measures will begin to scale back probably this year, investors in energy markets concluded.
Elsewhere, the Labor Department said the number of individuals filing for initial jobless claims in the U.S. rose by 5,000 to 333,000, better than market calls for a rise of 8,000, which cemented expectations by many that stimulus measures are on their way out.
Meanwhile, expectations that an end to North Sea supply snags will increase global supply dampened prices as well.
On the ICE Futures Exchange, Brent oil futures for September delivery were down 1.18% at USD106.18 a barrel, up USD3.38 from its U.S. counterpart.
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Written By: Investing.com
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