Forexpros – Crude oil futures were lower during European morning trade on Wednesday, ahead of comments by the Federal Reserve later in the day, while investors continued to focus on developments in the euro zone.
Oil traders were also looking forward to a supply report from the U.S. later in the day to gauge the strength of oil demand in the world’s largest oil consumer.
On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at USD83.59 a barrel during European morning trade, shedding 0.45%.
The July contract is due to expire at the end of Wednesday’s trading session. Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.
Meanwhile, the more actively traded contract for August delivery declined 0.5% to trade at USD83.94 a barrel. It earlier fell by as much as 0.6% to trade at a session low of USD83.86 a barrel.
The Fed’s two-day meeting concludes later Wednesday, amid growing hopes policy makers will announce measures to stimulate the world’s largest economy.
A growing number of Fed watchers expect the central bank to extend its Operation Twist program, in which it sells short-term bonds to buy long-term ones. The current USD400 billion Twist program is set to expire at the end of June.
The Fed’s Open Market Committee will release a policy statement at the end of the meeting. The announcement was to be followed by a press conference with Fed Chairman Ben Bernanke to discuss the monetary policy decision.
Oil traders were also looking ahead to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products later in the day.
The report was expected to show that U.S. crude oil stockpiles fell by 1.4 million barrels last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 0.55 million barrels last week, disappointing expectations for a decline of 1.0 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Meanwhile, markets continued to monitor developments in Greece, where political leaders were attempting to form a solid coalition government.
Spain’s deteriorating fiscal health remained in focus. The yield on Spanish 10-year bonds eased back to just below the critical 7% threshold, after climbing to euro-era highs earlier in the week, amid fears that Madrid will be forced to seek a full-fledged international bailout.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery fell 0.8% to trade at 95.02 a barrel, with the spread between the Brent and crude contracts standing at USD11.08.
Prices fell to USD94.50 a barrel on Tuesday, the lowest since January 10, 2011.
London-traded Brent prices are down nearly 25.5% since hitting an intraday high of USD128.38 on March 1.
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