Crude Oil And Brent Oil Diverge As Demand Shifts

Traders sit on the edge of their seats ahead of the Federal Reserve meeting and statement due later in the US trading session. Crude oil eased by 9 cents to trade at 97.32 as traders sold off to book profits after oil climbed steadily this week. The US dollar continues to climb ahead of the FOMC decision. Analysts said U.S. oil supplies rose last week, suggesting weaker demand. Weekly stockpiles data is likely to show increases of 2.1 barrels in crude oil stocks and 1.6 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos. The oil market rebounded on Tuesday as traders shrugged off poor US economic data to snap up bargain crude following recent losses, and awaited the Federal Reserve’s next move on stimulus. Traders said prices also gained ground on worries that another severe cold snap in the United States would boost demand and dent heating fuel reserves in the world’s top crude consuming nation.

Investors are also cautious ahead of the outcome of the Federal Reserve meeting that ends Wednesday. Officials are widely expected to cut the central bank’s monthly bond buying that has underpinned an economic recovery. Oil prices have been underpinned by the Fed’s stimulus because it has kept the dollar from strengthening, making oil more affordable for traders using other currencies. The low interest rates created by the bond buying have also attracted investors to commodities like crude oil in search of higher profits.

Inventories were forecast to have risen 2.2 million barrels, on average, in the week to January 24, according to a forecast of 11 analysts surveyed by Dow Jones Newswires. The official stockpiles report will be released by the US Energy Department later Wednesday. A rise indicates weak demand in the world’s biggest economy and oil consuming nation, putting downward pressure on prices.

Brent oil diverged from crude oil today to trade at 107.59 gaining 18 cents trading at the top edge of the trading range. Emerging markets came under pressure as the U.S. Federal Reserve looked set to continue tapering its stimulus and as tighter credit conditions in China raised fears of a slowdown. However, expectations the West will pick up the slack in China’s slowing oil demand-growth meant losses in crude futures were limited. Prices are also drawing support from lingering worries of a worsening geopolitical crisis in the Middle East.

Natural gas gave up 44 points to trade at 4.871 falling off its high of close to 5.20 as the cold weather from the polar vortex blankets the US. Natural-gas futures on Tuesday recouped much of what they lost a day earlier, as severe cold weather and expectations for more ahead raised concerns over U.S. supplies of the heating fuel.