Crude Oil Slightly Lower After Fed Statement, Inventory Data
U.S. crude futures settled slightly lower Wednesday, as traders weighed the Federal Reserve's latest assessment of the U.S. economy and data on U.S. oil inventories.
Light, sweet crude for July delivery settled 20 cents, or 0.2%, lower at $98.24 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe recently traded 26 cents lower at $105.76 a barrel.
Crude-oil futures finished lower as the Federal Open Market Committee raised its outlook on the U.S. economic recovery and said the labor market showed further improvement. It forecast economic growth of 2.3%-2.6% for 2013 and 3%-3.5% in 2014.
The oil market had been on edge in recent weeks over concerns the Fed would pare its $85-billion-a-month bond-purchasing program, which has helped stimulate economic growth in the U.S., the world's largest oil consumer. But it didn't make any statements on whether it would continue or reduce its stimulus program before prices settled at 2:30 p.m.
Oil traders rely on the Fed's economic outlook to gauge future oil demand. A stronger economy typically leads to greater energy use by businesses and motorists.
The oil market is "still going to digest" the FOMC statement, said Jason Schenker, president of Prestige Economics. He said oil futures had "priced in the continuation of the quantitative easing program more than other commodities."
Crude-oil futures were also pressured by a stronger dollar. The ICE Dollar Index, which tracks the greenback against a basket of currencies, was recently up 1%. As the value of the dollar strengthens, dollar-denominated oil becomes more expensive for buyers holding other currencies.
Oil futures were also pressured by data from the Energy Information Administration, which said crude oil inventories in the U.S. rose 300,000 barrels to 394.1 million barrels for the week ended Friday. Its weekly report said gasoline stockpiles rose by 200,000 barrels and stocks of distillates, comprising heating oil and diesel, fell by 500,000 barrels.
U.S. oil stockpiles have been near record levels for much of this year, due to surging domestic production and weak demand. The current level is the highest for this week since the EIA began tracking weekly stockpiles in August 1982. Stocks are less than 1% below the record weekly level of 397.6 million barrels hit on May 24.
Analysts had estimated that crude-oil stocks would fall 400,000 barrels, according to a survey by Dow Jones Newswires. They had expected gasoline stockpiles to rise by 1 million barrels and distillate stockpiles to have increased by 700,000 barrels last week.
"The build in crude was unexpected," said Carl Larry, president of Oil Outlooks and Opinions.
Front-month July reformulated gasoline blendstock, or RBOB, settled 1.30 cents higher at $2.8924 a gallon. July heating oil settled 1.08 cents higher at $2.9725 a gallon.
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