Oil Steadies as Focus Turns to Monetary Easing
(Bloomberg) -- Oil steadied after its first drop this week as attention turned from expanding American fuel stockpiles to the prospects for monetary easing as the world’s top central bankers gather in Jackson Hole, Wyoming.
Futures in New York were little changed after rising as much as 0.8% earlier. They had rebounded from a 1.2% decline on Wednesday that was spurred by a surprise jump in U.S. diesel and gasoline inventories. Investors see another rate cut at the Federal Reserve’s Sept. 17-18 meeting and will be closely watching Chair Jerome Powell’s speech Friday at the annual policy retreat.
Oil is heading for its first back-to-back weekly gain since June, aided by a drone attack on a Saudi Arabian oil field and hints of a thaw in U.S.-China trade relations. U.S. crude inventories fell by 2.7 million barrels last week, the first drop in three weeks, the Energy Information Administration said Wednesday.
“The Jackson Hole event is what the markets are keenly watching,” said Howie Lee, a Singapore-based economist at Oversea-Chinese Banking Corp. “That has the potential to move the markets for the next couple of days.”
West Texas Intermediate crude for October delivery fell 4 cents to $55.64 a barrel on the New York Mercantile Exchange as of 7:55 a.m. in London after being up as much as 43 cents earlier. The contract has risen 1.4% so far this week.
Brent for October settlement traded 10 cents lower at $60.20 a barrel on the ICE Futures Europe Exchange. The global benchmark traded at a premium of $4.57 to WTI.
The drop in U.S. crude inventories last week was overshadowed by a 2.61 million-barrel increase in stored supplies of diesel and other distillates. That’s heightening demand concerns, particularly as it’s still the U.S. summer driving season. Stocks of these products were forecast to decline by 300,000 barrels in a Bloomberg survey.
Investors are now pinning hopes on central banks to revive demand. Powell’s speech will be parsed for indications on how deep and long the latest U.S. easing cycle will be.
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