Crude oil drops as U.S. GDP data feeds taper speculation
Investing.com
Published Nov 07, 2013 09:29AM ET
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.
On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD94.37 a barrel during U.S. morning trade, down 0.45%.
New York-traded oil futures traded in a range between USD94.05 a barrel, the daily low and a session high of USD95.31 a barrel.
The December contract rose to USD95.40 a barrel on Wednesday, the highest since November 1, before settling at USD94.80 a barrel, up 1.53%.
Oil futures were likely to find support at USD93.11 a barrel, the low from November 5 and resistance at USD96.64 a barrel, the high from November 1.
Official data showed that the U.S. economy grew at an annual rate of 2.5% in the three months to September, well above expectations for growth of 2%.
The stronger-than-expected data added to ongoing speculation that the Fed may start tapering its USD85-billion-a-month bond-buying program at its December meeting, boosting the U.S. dollar.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 1% to trade at 81.39, the highest since September 13.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
Meanwhile, in the euro zone, the European Central Bank cut its benchmark interest rate to a record low 0.25% from 0.5%, saying the decision was 'in line' with the ECB's forward guidance on interest rate policy from July.
ECB President Mario Draghi reiterated that euro zone borrowing costs will remain at their present or lower levels until conditions improve, indicating that further rate cuts are still possible.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery dropped 1.2% to trade at USD103.99 a barrel, with the spread between the Brent and crude contracts standing at USD9.62 a barrel.
London-traded Brent prices fell to USD104.91 a barrel earlier in the session, the lowest since July 2.
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Written By: Investing.com
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