On Tuesday Brent crude oil prices traded down as a result of concerns over weakening demand and sluggish economic growth. West Texas Intermediate crude traded near its highest closing level in over a week prior to forecasts that are expected to show that inventories fell the previous week.
Investors await Fed meeting
Oil's losses came as investors wait for the Fed's two-day policy meeting to begin Tuesday. This meeting is among the most highly awaited gatherings of the year as the central bank establishes the groundwork for an increase in interest rates, reports Market Watch.
WTI futures changed little after previously falling 0.4 percent in New York. According to a Bloomberg News survey before data from the Energy Information Administration tomorrow, last week U.S. crude inventories probably declined by 1.5 million barrels to 357.1 million.
In electronic trading on the New York Mercantile Exchange, the October contract for WTI fell 10 cents at $92.83 a barrel, having traded lower as much as 37 cents to $92.55 a barrel. The total volume of all futures were around 22 percent under the 100-day average for the time of day. Over the course of the year, prices have dropped 5.6 percent, reports Bloomberg.
Amrita Sen, chief oil market analyst at Energy Aspects Ltd. in London, said in a report to Bloomberg, "U.S. crude stocks are tight since this year's output growth has been absorbed. The U.S., home to the fastest-growing crude production, remains the strongest crude market globally this year."
Global oil stocks
Brokerage PVM hinted at a downgrade by the Organization for Economic Cooperation and Development of its 2014 growth forecasts. This included reduced expectations for the U.S. and U.K, according to The Wall Street Journal. Analysts say that in addition to the Fed meeting, the vote on independence in Scotland to be held later this week is another important factor that will continue to curb prices.
Brent for November delivery fell 4 cents to $97.84 a barrel on the London-based ICE Futures Europe exchange, while the October contract expired yesterday, having declined 46 cents to $96.65 a barrel. Europe's benchmark crude was at a premium of $5.97 a barrel to WTI on ICE for November, reports Bloomberg.
A meeting between Russian energy minister Alexander Novak and the Organization of the Petroleum Exporting Countries in Vienna was also a focus of oil investors. They are expected to focus on the recent fall in oil prices at the meeting, which had been organized prior to the decline of oil prices that have plummeted under $100 a barrel. However, analysts at Commerzbank said in a note that there is strong potential that the two parties will settle on a possible coordination of strategy, according to Market Watch.
Kash Kamal, analyst at Sucden Research, told The Wall Street Journal, "With geopolitical concerns regarding Russia and Ukraine on the back burner and a risk-off attitude ahead of tomorrow's Fed press conference and Thursday's Scottish referendum we could see prices remain under pressure throughout the remainder of the day and in the coming sessions."
A lagging demand for oil in China, one of the world's largest consumers, has also become a concern. According to Market Watch, PVM wrote in a note to clients that soft industrial output data from China, along with the worries over a sharp increase in U.S. interest rates have added to bearish cocktail.
Meanwhile, in other areas of the energy market, gasoline for October delivery traded higher 0.1 percent to $2.53 a gallon, as heating oil for the same month dropped 0.3 percent to $2.73 a gallon. October natural-gas futures declined 0.5 percent to $3.92 per million British thermal units.
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