LONDON: Brent oil futures held above $108 a barrel yesterday with investors reluctant to lock in positions ahead of a US Federal Reserve policy decision on a plan to trim its monetary stimulus.
Fed Chairman Ben Bernanke is expected to give details later on when the US central bank may start to reduce its $85bn-a-month bond-buying programme which has underpinned global assets including commodities and restrained the dollar.
Brent crude fell 10 cents to $108.34 by 1323 GMT, after settling nearly $1 lower on Tuesday. US oil rose 17 cents to $97.39, after ending 26 cents lower.
“Today the market will focus on the FOMC’s (Federal Open Markets Committee) December policy statement where any dollar bullish sentiment would add to Brent’s downside,” said VTB Capital analyst Andrey Kryuchenkov.
A steady run of firm US economic data in recent weeks has raised speculation the Fed could reduce its bond buying, known as quantitative easing or QE, at its policy meeting ending later in the day.
“The market is mixed as to whether or not the US Fed will announce a tapering programme of its massive QE3 stimulus buying that has been adding $85bn per month to the economy,” said Dominick Chirichella of the Energy Management Institute.
“The US economy has been improving over the last several months but the main question facing the Fed is (whether) the economic improvement of late is sustainable and will the economy continue to expand enough to continue to lower the still large unemployment problem in the US?”
US oil was supported by demand growth hopes at the world’s largest oil consumer after industry data showed a larger-than-expected fall in crude stockpiles.
Reuters
