Oil Is Steady as Traders Await Federal Reserve Decision
Futures stayed in a $1.29-a-barrel range as traders focused on the Federal Open Market Committee, which starts a two-day policy meeting on Sept. 12 and may implement a third round of asset purchases known as quantitative easing.
“The market is in a holding pattern at the moment,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Prices shouldn’t do a lot until later this week. The FOMC meeting on Thursday will be a key.”
Oil for October delivery rose 12 cents to settle at $96.54 a barrel on the New York Mercantile Exchange. The range for the past 10 sessions has been $93.95 to $97.71. Prices are down 2.3 percent this year.
Brent for October settlement advanced 56 cents, or 0.5 percent, to end the session at $114.81 a barrel on the London- based ICE Futures Europe exchange. Brent was at a $18.27 premium to New York-traded West Texas Intermediate crude, up from $17.83 on Sept. 7.
The European benchmark grade rose on concern that Middle East unrest will disrupt shipments from the region. A series of bomb attacks yesterday killed 34 people in Iraq, including more than a dozen in the northern oil region of Kirkuk, Deputy Health Minister Khamees al-Saad said. Iraq is the second-biggest oil producer in the Organization of Petroleum Exporting Countries.
“Brent may be getting some support because of concern about Iraqi supplies,” Evans said. “Brent is more sensitive to events in the region because Europe is more dependent than the U.S. on Middle East supplies.”
Oil slipped as much as 1.1 percent in intraday trading on concern that the European debt crisis is spreading and weaker- than-expected economic reports. Greece struggled to qualify for another round of aid and traders awaited a German court ruling and Dutch elections.
Germany’s Federal Constitutional Court in Karlsruhe will decide whether to suspend the 500 billion-euro ($639 billion) European Stability Mechanism on Sept. 12. On the same day, Dutch voters will decide whether to back parties questioning an expansion of European Union powers.
“The market is in wait-and-see mode,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “We have a lot happening this week with the German court decision, the Dutch election and the Fed meeting.”
China’s industrial output rose the least in three years, the National Bureau of Statistics said yesterday. Chinese imports fell 2.6 percent in August from a year earlier as exports rose 2.7 percent, the customs bureau said today.
Japan’s economy expanded in the second quarter at half the pace the government initially estimated. Gross domestic product grew an annualized 0.7 percent in the three months through June, the Cabinet Office said in Tokyo.
Italy’s economy contracted more than initially reported in the second quarter. GDP shrank 0.8 percent from the previous three months, more than the 0.7 percent first reported by the National Statistics Institute on Aug. 7.
Electronic trading volume on the Nymex was 398,631 contracts as of 4:10 p.m. Volume totaled 560,581 contracts Sept. 7. Open interest was 1.57 million, the most since May 9.
“Prices have been above $90 for a while now,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “When there’s anticipation that prices are going to rise, open interest increases.”
Oil in New York has traded above $90 a barrel since Aug. 3.
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