Crude Drops Slightly as Stockpiles Rise, FOMC Looms
U.S. crude futures posted a slight drop Wednesday after government data showed a surprise increase in U.S. oil stockpiles and as tensions flared in the Middle East.
Many investors were also cautious ahead of the Federal Open Market Committee statement due Thursday.
Light, sweet crude for October delivery settled 16 cents lower at $97.01 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 46 cents higher at $115.23 a barrel.
U.S. commercial crude-oil stockpiles rose by 2 million barrels last week, according to data released Wednesday by the U.S. Energy Information Administration. The increase surprised analysts who had predicted, on average, a decline of 2.2 million barrels.
Stockpiles of distillate, which include heating oil and diesel, rose by 1.5 million barrels, while gasoline stocks fell by 1.2 million barrels.
The report signaled that supplies were on the rise a week after sharp declines spurred by Hurricane Isaac's impact on Gulf of Mexico oil production.
But events in the Middle East, and cautious moves by many investors ahead of a monetary-policy statement from the Federal Reserve, kept prices from further declines.
The U.S. ambassador to Libya was killed during violent protests in the oil-rich nation over an anti-Muslim video produced in the U.S. Additionally, the rift between the U.S. and Israel appeared to grow after comments from Israel's prime minister late Tuesday that the U.S. has no right to stop Israel from attacking Iran.
Analysts said the subdued reaction in oil prices indicated the market had already taken account of the turbulent situation.
"It's not going to result in anything except some words," said Dominick Chirichella, an analyst at the Energy Management Institute. "There's not an impact on oil."
Meanwhile, the FOMC is due to deliver its closely watched decision on monetary policy Thursday. While central bank officials have indicated they may take further steps to stimulate the economy, thus far they have stopped short of a third round of quanitative easing, or QE3.
"Much of today's trade represented positioning ahead of tomorrow's FOMC announcement," said Jim Ritterbusch, head of oil-trading adviser Ritterbusch and Associates.
Front-month October reformulated gasoline blendstock, or RBOB, settled 4.19 cents lower at $3.0016 a gallon. October heating oil settled 2.95 cents higher at $3.2152 a gallon.
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