The price of oil rose above US$98 yesterday as traders awaited the latest word on both the Federal Reserve’s monetary policy and US oil supplies. US benchmark oil for July delivery rose 67 cents to close at US$98.44 a barrel on the New York Mercantile Exchange. The focus in oil markets, as in others, was on the Fed, as policymakers began a two-day meeting.
To help support the US economic recovery, the Fed has been buying US$85 billion in bonds every month in an attempt to keep long-term interest rates low and encourage lending. The new money generated has flowed into the financial system, helping many assets, including oil, to climb from the lows witnessed during the global recession following the 2008-2009 financial crisis.
After the meeting ends today, Fed chairman Ben Bernanke will hold a press conference. Investors want to hear if the Fed plans to reduce the amount of financial assets it is buying each month. Few expect a change in policy today as some recent economic data has been disappointing. The uncertainty though has rattled markets in recent weeks.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said in a note to clients that big gains yesterday in the stock market indicated that Wall Street expects the Fed to maintain its current policy. Oil traders will also be monitoring fresh information on US stockpiles of crude and refined products.
Data for the week ending June 14 is expected to show a decline of 1 million barrels in crude oil stocks and an increase of 1.2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill. The American Petroleum Institute released its report on oil stocks last night, while the report from the Energy Department’s Energy Information Administration—the market benchmark—will be out today.
Brent crude, a benchmark for many international oil varieties, gained 55 cents to US$106.02 a barrel on the ICE Futures exchange in London. In other energy futures trading on the Nymex:
• Wholesale gasoline added two cents to US$2.88 a gallon.
• Heating oil was rose one cent to US$2.96 per gallon.
• Natural gas gained three cents to US$3.91 per 1,000 cubic feet.
Meanwhile, metal prices fell yesterday as traders anticipate that the Federal Reserve may start easing its support for the US economy. The price of gold for August delivery fell US$16.20, or 1.2 per cent, to US$1,366.90 an ounce. Palladium and silver also declined. Only platinum bucked the trend and edged higher.
The central bank will end its two-day policy meeting today. Until this year, the Fed’s bond-buying stimulus programme had helped drive gold prices to record highs. Many investors thought the Fed’s efforts to pump money into the financial system would lead to high inflation, and they bought gold as insurance. Yet inflation has remained tame and the Fed may now signal it intends to ease its stimulus as the economy recovers. Gold has fallen 18 per cent this year.
“The bears are maintaining control of the metals until proven otherwise,” said Matt Zeman of Kingsview Financial. Silver for July delivery fell 8.1 cents, or 0.4 per cent, to US$21.677 an ounce. Copper for the same month dropped 4.25 cents, or 1.3 per cent, to US$3.155 a pound. Palladium for September fell US$9.50, or 1.3 per cent, to US$708.35 an ounce. Platinum for July gained $5.30, or 0.4 per cent, to US$1,440.10 an ounce. In trading of agricultural products, wheat, corn and soybeans all rose.
Wheat for July gained seven cents, or one per cent, to US$6.875 a bushel. Corn for December rose 12 cents, or 2.2 per cent, to US$5.5050 a bushel. Soybeans for November climbed 4.25 cents, or 0.3 per cent, to $12.8975.
Source-AP
Related Posts
Dominica to implement measures to cushion impact of Middle East war on local economy
Prime Minister Roosevelt Skerrit shared that we are exposed to the economic…
