World oil prices slip, markets awaits Bernanke speech

15th October 2010, Comments 0 comments

Crude oil prices fell on Friday, one day after the OPEC oil cartel froze its production levels, as traders awaited a crucial speech from US Federal Reserve chairman Ben Bernanke.

New York's main contract, light sweet crude for delivery in November, dropped 13 cents to 82.56 dollars a barrel.

Brent North Sea crude for November dipped 25 cents to 83.95 dollars per barrel in early afternoon London deals.

"Crude oil prices remained under pressure below 83 dollars per barrel," said Sucden analyst Myrto Sokou.

"Investors remained cautious ahead of the Bernanke speech later today regarding the US Fed budget details and the US economic outlook.

"The US dollar weakened further and hit its lowest level in 2010 against a basket of currencies, but failed to provide some support to the oil market, as trading conditions remain volatile and nervous ahead of the Bernanke speech."

The Federal Reserve chief is scheduled to speak at about 1215 GMT at the Boston Fed's annual conference.

This week, the US unit has tumbled after minutes from last month's Fed policy meeting showed that the US central bank anticipates additional stimulus may be needed soon to prop up a slowing economic recovery.

That sparked feverish speculation that the Federal Open Market Committee (FOMC) could next month implement a second round of quantitative easing, via the purchasing of bonds and other assets.

The weak dollar normally boosts dollar-priced oil, which becomes cheaper for buyers using stronger currencies and therefore tends to boost demand.

Later on Friday, traders will also digest a host of economic data in the United States, which is the world's biggest oil consuming nation.

"Today, it looks a fairly busy day in the US economic data with investors watching for US retail sales, business inventories, NY Fed manufacturing figures, CPI inflation as well as the US economic conditions and expectations from the University of Michigan survey," added Sokou.

"These major economic indicators are likely to affect the US dollar movements and the direction of the global equity markets and might provide the oil market with direction."

Crude futures slid Thursday after OPEC's decision to maintain its output target and news of a surprise drop in crude reserves in the United States, the world's top oil consumer.

The Organization of Petroleum Exporting Countries (OPEC) left its official oil production target unchanged on Thursday, in line with expectations in the face of an uncertain economic outlook, after a high-profile meeting in Vienna.

OPEC, which pumps 40 percent of the world's oil, agreed to keep its target at 24.84 million barrels a day.

Also on Thursday, the US government's Department of Energy (DoE) revealed that American crude stockpiles fell unexpectedly in the week ending October 8.

Crude reserves dropped by 400,000 barrels last week, confounding market expectations for a gain of 1.2 million barrels.

Earlier this week, oil was buoyed by news of record Chinese crude imports in September, which showed strengthening demand from the Asian powerhouse.

And prices won some support after the International Energy Agency upgraded its energy demand forecasts, mainly because of an economic upturn in industrialised countries.


© 2010 AFP

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