Forexpros – Crude oil futures fell in Asian trading on Tuesday as investors sold to wait and see if the Federal Reserve and the European Central Bank will hint at a need or not to stimulate their respective economies.
Both monetary policy authorities will meet this week, and a decision to intervene — from the Fed especially — could send oil gaining.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD89.71 a barrel on Tuesday, down 0.08%, off from a session high of USD89.75 and up from an earlier session low of USD89.53.
The European Central Bank and the Federal Reserve are due to address monetary policy this week, and talk has been growing the Fed may roll out a third round of quantitative easing to spur U.S. recovery, while the ECB may uncork similar tools to lower borrowing costs and push the European economy towards growth.
Under quantitative easing, the Fed buys bonds held by banks, pumping liquidity into the economy and weakening the greenback in the process, making oil suddenly a nicely priced commodity on dollar-denominated exchanges.
Oil also dipped on news Spain remains locked in a recession.
In Spain, the government announced the economy contracted 0.4% on year in the second quarter, in line with expectations.
Sentiment in Europe, meanwhile, took a turn for the worse.
The European Commission’s index of economic sentiment across the eurozone dropped to 87.9 in July compared with 89.9 in June.
Analysts were expecting a reading of 88.7.
Weak economic indicators often send oil falling, as they reflect an economy less in need of fuels and energy to grow.
Meanwhile sentiments that U.S. crude stockpiles may have grown this week also pushed oil down.
The U.S. government will publish its weekly data on Wednesday.
Markets are eager for direction on the global economy.
Last Friday, the Commerce Department reported that the U.S. gross domestic product expanded by 1.5% in the second quarter, down from an upwardly revised 2.0% in the first quarter.
The U.S. and eurozone will release unemployment figures this week as well, which further kept investors on the sidelines.
On the ICE Futures Exchange, Brent oil futures for September delivery were up 0.15% and trading at USD106.03 a barrel, up USD16.32 from its U.S. counterpart.
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