Oil prices retreated today, weighed down by caution ahead of this week’s key policy meetings of the Federal Reserve and the European Central Bank (ECB) and weak European data.
The Federal Open Market committee (FOMC) will kick off its two day meeting later today and make a policy announcement tomorrow with investors hoping for more stimulus action.
It is widely expected that the Fed will pledge to keep interest rates at ultra-low levels beyond 2014, while it is unlikely that policymaker will launch a third round of quantitative easing.
Europe’s central bank will hold its policy meeting on Thursday. Last week, expectations of further steps by the ECB to curb growth in borrowing costs in the Europe zone were boosted by comments from ECB president Mario Draghi.
Draghi said the bank would do whatever it takes to save the euro, which he said was irreversible, while Germany and France also pledged to support the single currency and keep the monetary union from breaking up.
Apart from uncertainty ahead of the meetings, demand for riskier assets was pressured by weak European jobs figures released by Eurostat today.
The report revealed that unemployment in the euro zone hit all time highs last month, climbing 123,000 to 17.8 million, while the jobless rate held steady at 11.2 percent,
In addition, Destatis said retail sales in Germany declined 0.1 percent in June compared with expectations of a 0.5 percent increase.
Oil prices received a little support from expectations of a decline in US crude inventories.
According to analysts polled by Bloomberg, tomorrow’s closely watched inventories data from the Energy Department may show that America’s crude stocks shed 1.1 million barrels last week.
The American petroleum Institute (API) will released its inventories figures later today.
US light, sweet crude for September delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell 32 cents to US$89.46/barrel this afternoon.
September Brent crude declined 36 cents to US$105.84/barrel on the ICE Exchange.
Today’s top risers in the oil and gas sector were:
Sirius Petroleum (LON:SRSP), up 14 percent at 3.57 pence at midday
Gulf Keystone Petroleum (LON:GKP), up 6.5 percent at 193.75 pence
Amerisur Resources (LON:AMER), up 6.5 percent at 37.55 pence
Max Petroleum (LON:MXP), up 6 percent at 3.87 pence
Regal Petroleum (LON:RPT), up 4.5 percent at 14.25 pence
The top fallers were:
Frontera Resources (LON:FRR), down 14.5 percent at 0.46 pence at midday
Borders & Southern Petroleum (LON:BOR), down 7 percent at 16.5 pence
BP (LON:BP.), down 4.5 percent at 424.65 pence
Oilex (LON:OEX), down 4 percent at 5.26 pence