Forexpros – Crude oil futures declined on Wednesday, as the U.S. dollar strengthened after a meeting of euro zone leaders failed to reassure markets, while traders awaited key weekly U.S. inventory data later in the day.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD99.31 a barrel during European morning trade, dropping 0.52%.
It earlier fell by as much as 0.85% to trade at a daily low of USD98.96 a barrel.
Euro zone finance ministers announced late Tuesday that they had agreed on terms for options to expand the European Financial Stability Facility, the region’s bailout fund.
However, markets were disappointed after they said its capacity to assist indebted nations would not be as large as initially hoped.
Also Tuesday, European Central Bank governing council member Christian Noyer said the situation in the euro zone has significantly worsened, threatening global financial markets.
Sentiment was also weighed after the Guardian Newspaper reported that euro zone finance ministers were warned during Tuesday’s meeting that Italy was at risk of insolvency, with a potential devastating impact on the region’s core economies of Germany and France.
The euro traded close to a seven-week low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.3% to trade at 79.36.
Meanwhile, oil traders were awaiting key weekly government data on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The report was expected to show that U.S. crude oil stockpiles rose by 1.0 million barrels last week, while gasoline supplies were forecast to increase by 1.1 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose 3.4 million barrels last week, while total gasoline supplies declined by 0.17 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery shed 0.75% to trade at USD109.99 a barrel, with the spread between the Brent and crude contracts standing at USD10.68 a barrel.
Brent prices remained supported amid growing fears over a disruption to supplies from Iran after the British embassy in Tehran was attacked on Tuesday during a rally to protest against sanctions imposed by Britain.
Iran is the world’s fourth largest oil producer and the second biggest exporter among OPEC members.
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