NEW YORK (MarketWatch) — Oil futures fell on Thursday with analysts attributing weakness to a closer read on the reasoning behind the Federal Reserve’s policy decision as well as pressure from easing Middle East supply concerns. The dip comes a day after prices soared on a U.S. supply drop and the Fed’s surprise decision to maintain its monthly bond purchases of $85 billion. October crude oil CLV3 -0.29% shed $1.68, or 1.6% to end at $106.39 a barrel on the New York Mercantile Exchange. The contract had traded as high as $108.99 earlier Thursday, according to FactSet data, building on its rally in the prior day. On Wednesday, prices jumped 2.5% to settle at $108.07 a barrel. The Fed on Wednesday also cut its economic forecast for the third time this year, now expecting growth of 2.0% to 2.3% in 2013, raising concerns about future energy demand. “Yesterday’s euphoric rally is starting to be viewed as being a bit overdone,” said Matt Smith, a commodity analyst at Schneider Electric, in emailed comments. “It was based on a weaker economic outlook from the Fed, after all.” Part of the decline could also be attributed to waning concerns about U.S. military action against Syria. “It’s possible that some of the Syria speculation is still coming out of it,” said Colin Cieszynski, a senior analyst at CMC Markets. Oil retreated in mid-September after surging in late August and early September on fears about the Syria conflict. But it then jumped Wednesday, and the recent recovery might have spurred some profit-taking by “lingering Syria sellers trying to take advantage of the pop,” Cieszynski told MarketWatch on Thursday. He also said that oil has “gone its own way” to some extent in the past two days, climbing early Wednesday after the supply data and then just rallying “a little more” on the Fed news. Tim Evans, energy futures specialist at Citi Futures and OTC Clearing, said developments in Libya are also a factor. “Petroleum prices are seeing some quick profit-taking off Wednesday’s bullish reaction to the FOMC statement as a recovery in Libyan oil production adds more physical barrels to the market,” Evans wrote in emailed comments Thursday. “We see this tension between easy Fed policy which supports risk-on trade flow and a global market that is looking better supplied as the key dynamic in the petroleum complex at the moment.” Even so, data from the U.S. Energy Information Administration Wednesday said crude stockpiles for the week ended Sept. 13 fell 4.4 million barrels, which far exceeded expectations for a fall of 1.5 million barrels from Platts. The drop in U.S. supplies contributed to gains in oil prices Wednesday.
Posted on: Fri, 20 Sep 2013 02:59:14 +0000
Trending Topics
Recently Viewed Topics
© 2015