Crude Oil is trading at 97.04 on the hopes of stimulus from the US Federal Reserve this week. Crude oil ticked higher reversing earlier declines though broadly it continued its consolidation. NYMEX crude oil traded in the vicinity of its three week high and Brent Crude oil rose above $115 a barrel. Further drawdown anticipated in crude oil inventories owing to tropical storm Isaac and speculation brewing over possible launch of another round of quantitative easing supported the sentiments.
The Saudi Oil Minister is upset and says that prices are too high for the amount of oil available. There are also more and more stories surfacing about the Obama Administration and the Strategic Oil Reserves, with higher level denials, but still nothing official and nothing from the White House. The Admin may be waiting for the FOMC ruling to decide what action to take or to combine the two for the best bang for the buck.
Market participants are fully expecting U.S. Federal Reserve officials to announce additional stimulus measures at the conclusion of a policy-setting meeting on Thursday, said Michael Lynch, president of Strategic Energy & Economic Research in Massachusetts.
The Federal Open Market Committee starts its two-day policy meeting today, Wednesday. Read what Fed watchers have to say about this week’s meeting.
Other analysts were less optimistic about stimulus prospects.
While there’s been a shift toward expecting a Fed policy response to a softer U.S. economy, the outcome of the FOMC meeting is still uncertain, said Tim Evans, an analyst with Citigroup’s Citi Futures Perspective in a note to clients.
“With expectations running high, there is some risk of a sell-the-news reaction, even if the Fed does take action,” he said. “The same sort of sell-the-news reaction could also exist with regard to the weekly U.S. inventory data,” said Evans.
Barry Norman – FX Empire Analyst
Claudia Assis and Kate Gibson – MarketWatch.com
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