Oil Rises Slightly as Market Awaits OPEC, FOMC Meetings
Crude oil futures snapped a five-day streak of declines and rose modestly Tuesday on strong German investor sentiment data one day before a meeting of OPEC.
Crude futures spent most of the day in positive territory, settling at $85.79 a barrel, up 23 cents, or 0.3%. Brent futures settled at $108.01, up 68 cents.
Investors were reluctant to make major bets before a couple of key events Wednesday, market participants said. Besides Wednesday's meeting of the Organization of Petroleum Exporting Countries, Wednesday will also see the conclusion of a U.S. Federal Open Market Committee at the U.S. Federal Reserve and the release of the International Energy Agency's monthly oil market report.
"The market is just kind of marking time before the OPEC meeting," said Andy Lebow, a broker at Jefferies Bache.
The market is trading "rather tentatively," said Matt Smith, analyst at Summit Energy, an energy consultancy. "There's just a little bit of moderate buying for crude here, but nothing too crazy given the newsflow for the next day or two."
Crude futures got a lift from the release of a German benchmark on investor sentiment, which beat expectations.
The ZEW economic expectations index, which measures German investor sentiment, rose to 6.9 in December, according to the Center for European Economic Research, up from a decline of 15.7 in November. Economists had forecast a reading of negative 11.3.
Market participants said the oil market was also anticipating that the U.S. Federal Reserve will maintain its bond-buying program given the uncertainty of current economic conditions.
OPEC, meanwhile, is also expected to sanction a status-quo move to keep output unchanged. However, some analysts think the organization could signal its interest in trimming output some time in 2013 given the growth of oil supply in the U.S. and some other non-OPEC countries.
OPEC is pumping 30.8 million barrels a day, while it sees 2013 demand for its crude at 29.7 million barrels, according to OPEC's monthly oil market report, which was released Tuesday.
Mr. Lebow rated it a "very low probability" that OPEC would announce a production cut Wednesday.
With concerns about the Middle East having receded in recent days, there has been little to lift oil prices next to rising questions about weak demand due to economic uncertainty. Oil prices dropped about 4% during the five days of declines before rising again on Tuesday.
Mr. Lebow observed a "bearish" tone in Tuesday's release of OPEC's monthly oil market report. He sees oil prices as trending "flattish to down" in the coming period.
John Kilduff, a trader at Again Capital, said oil prices could take another hit if Wednesday's release of weekly oil inventory data again points to large builds of petroleum products as last week's survey did.
"If we get big builds, they'll be more downward pressure," Mr. Kilduff said.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.611 per gallon, up 1.3 cents. Heating oil futures settled at $2.927 a gallon, up 3.1 cents.
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