Forexpros – Crude oil futures edged lower during European morning hours on Wednesday, after Federal Reserve Chairman Ben Bernanke gave a bleak assessment of the U.S. economy and failed to point towards any near term monetary stimulus.
Ongoing concerns over the health of the global economy and its impact on oil demand further weighed on prices.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD88.89 a barrel during European morning trade, dipping 0.25%. Prices touched USD89.45 a barrel on Tuesday, the highest since May 30.
The August contract is due to expire on Friday, July 20.
Meanwhile, the more actively traded contract for September delivery eased down 0.3% to trade at USD89.26 a barrel.
The September contract traded in between a tight range of USD88.91 a barrel, the daily low and a session high of USD89.45.
In testimony on the economy and monetary policy to the Senate Banking Committee on Tuesday, Bernanke delivered a negative assessment of the outlook for the U.S. economy.
He said growth had lost momentum in the first half of the year and added that progress on cutting the U.S. unemployment rate was “frustratingly” slow.
However, he refrained from indicating whether the Fed would embark on a third round of quantitative easing to stimulate the economy, but reiterated that the central bank was prepared to take further action to support the economic recovery if necessary.
Market participants now looked ahead to Bernanke’s return to Capitol Hill later Wednesday to testify to the House Financial Services Committee.
Oil traders were also focusing on closely-watched weekly supply data on U.S. stockpiles of crude and refined products from the U.S. Energy Information Administration later in the day.
The report was expected to show that U.S. crude oil stockpiles fell by 1.1 million barrels last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 2.0 million barrels last week, compared to expectations for a decline of 0.5 million barrels.
The U.S. is the world’s largest oil consumer. Worries about the U.S. economy have been dominating market sentiment in recent weeks, alongside the ongoing debt crisis in the euro zone and China’s cooling growth.
Earlier in the week, the International Monetary Fund reduced its outlook for global growth to 3.5% from its April forecast of 3.6%, citing the impact of the euro zone’s ongoing debt crisis on emerging market economies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery shed 0.4% to trade at USD103.61 a barrel, with the spread between the Brent and crude contracts standing at USD14.35.
London-traded Brent prices rose to as high as USD104.74 a barrel on Tuesday, the highest since May 30.
A fresh warning by Iran to block the Strait of Hormuz if its security is threatened supported Brent prices.
The U.S. Treasury and State Departments said late last week that it will target a number of banks and shipping companies it believes are being used to evade international sanctions on Iranian oil exports.
A European Union embargo on purchases of Iranian oil came into full effect on July 1.
Brent prices have been well-supported in recent sessions amid growing concerns over tightening supplies from Norway, outages in the North Sea region and following the launch of Western-led sanctions targeting Iranian oil exports on July 1.
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