Oil prices slide before US rate call, energy data

22nd June 2011, Comments 0 comments

Oil prices fell on Wednesday ahead of a Federal Reserve interest rate decision and economic assessment, alongside an update on energy inventories in the United States, the world's top crude consumer.

Brent North Sea crude for August shed 35 cents to $110.60 a barrel in London midday deals.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for August delivery, lost 72 cents to $93.45 a barrel. The July contract had expired on Tuesday.

The Fed will announce the outcome of its two-day monetary policy meeting at 1815 GMT on Wednesday, and publish updated estimates on US economic growth, unemployment and inflation.

"Today's focus will be on the Federal Reserve's meeting," said Commerzbank commodities analyst Carsten Fritsch.

"The likely downward revision of the assessment of the economy could weigh on oil prices. However, as the ultra-loose monetary policy will probably be maintained, the negative impact on oil prices should be limited. We therefore do not expect prices to drop under the $110-a-barrel mark."

Fed policymakers are meeting amid signs of weakness in the world's biggest economy that are clouding prospects for withdrawal from a massive financial stimulus that the US central bank has provided since the 2008 financial meltdown.

Ahead of the Fed announcements and a rare press conference by Federal Reserve chairman Ben Bernanke, the US government's Department of Energy will publish its energy inventories report at 1430 GMT.

Meanwhile, the oil market failed to draw strength from news that Greek Prime Minister George Papandreou's government survived a confidence vote on Wednesday.

The administration carried a confidence vote through parliament to pursue critical reforms needed to unlock vital new assistance from its international creditors.

Most analysts predict that the real fight in Athens will come when the austerity measures face a vote by lawmakers by the end of the month.

"This outcome had been expected and therefore did not come as a surprise," said analyst Fritsch.

"Furthermore, the more decisive vote is yet to come when (Greek) austerity measures are put to parliament on 28 June."

In recent days and weeks, the Greek-eurozone debt crisis had prompted deep concern that it could spark lower energy demand from Europe.


© 2011 AFP

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