NEW YORK: Oil futures retreated yesterday on worries the Federal Reserve could phase out its stimulus programme, and in an uncertain demand outlook for the global economy following weak growth forecasts for China.
The pullback leaves both Brent and US crude in the middle of the bands in which they have hovered throughout May, highlighting a lack of trading conviction amid uneven global economic data and concerns that signs of recovery in the US could curb the Fed’s liquidity programme.
Front-month Brent futures slipped 28 cents to $103.95 per barrel by 10.50 EDT (1450 GMT), after rising more than $2 in the previous session to the highest since May 21. US crude shed 37 cents to $94.63.
“It’s become a fairly tight trading range. US crude is settling into the $92 to $98 range, and Brent too is kind of locked into the $100 to $106 range,” said Andy Lebow, vice president at Jefferies Bache in New York.
The International Monetary Fund cut its growth forecast for China this year to 7.75 percent from 8 percent, citing a weak world economy and exports, while the OECD cut its forecast to 7.8 percent from 8.5 percent.
“The IMF downgrade of the Chinese economic outlook is going to be difficult to overcome today,” said John Kilduff, partner at Again Capital in New York.
Reuters
