U.S. crude oil prices ended higher on Tuesday, as the Federal Reserve began its crucial two-day monetary policy meet. Few people know for sure whether the Fed will finally raise interest rates after eight years at zero.
Economic headwinds are starting to blow fiercely again, including a major slowdown in China, but some say the Fed will tighten nonetheless. But that could strengthen the dollar and dent crude oil prices.
Crude oil prices have also been held in check by OPEC’s determination to keep markets oversupplied, in a bid to snuff out competition from the U.S. and Canada.
The Fed will announce its policy decision Thursday afternoon, with analysts divided whether the central bank will raise interest rates. If a hike is indicated, then it would be the first since 2006.
Investors also await the weekly U.S. inventories data, with the American Petroleum Institute’s report due late Tuesday. The official weekly oil stockpiles data from the U.S. Energy Information Administration is due Wednesday morning.
Light Sweet Crude Oil futures for October delivery, the most actively traded contract, gained $0.59 or 1.3 percent, to settle at $44.59 a barrel on the New York Mercantile Exchange Monday.
Crude prices for October delivery scaled a high of $45.03 a barrel intraday and a low of $43.92.
On Monday, crude oil shed $0.63 or 1.4 percent, to settle at $44.00, on some disappointing economic data from China, with the the Organization of the Petroleum Exporting Countries slashed its supply forecast for U.S. producers.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.58 on Tuesday, up from its previous close of 95.27 in late North American trade on Monday. The dollar scaled a high of 95.68 intraday and a low of 95.13.
The euro trended lower against the dollar at 1.1275 on Tuesday, as compared to its previous close of 1.1317 in North American trade late Monday. The euro scaled a high of 1.1331 intraday and a low of 1.1260.
On the economic front, U.S. retail sales in August edged up by 0.2 percent following an upwardly revised 0.7 percent increase in July. Economists expected retail sales to rise by 0.3 percent compared to the 0.6 percent growth originally reported for the previous month.
Industrial production in the U.S. fell 0.4 percent in August following an upwardly revised 0.9 percent increase in July. Economists expected production to dip by 0.2 percent compared to the 0.6 percent growth originally reported for the previous month.
The New York Fed’s general business conditions index inched up to a negative 14.7 in September from a negative 14.9 in August. A negative reading indicates contraction in manufacturing activity. Economists expected the general business conditions index to show a more substantial improvement to a reading of negative 0.5.
A Commerce Department report on Tuesday showed a modest uptick in total business inventories in July, with increase in retail inventories partly offset by decreases in manufacturing and wholesale inventories,
Business inventories inched up 0.1 percent in July, following a downwardly revised 0.7 percent increase in June. The increase was in line with economist estimates.
Eurozone trade surplus grew for a second straight month in July and exceeded economists’ expectations, figures from the Eurostat showed Tuesday. The seasonally adjusted trade balance rose to EUR 22.4 billion from EUR 21.9 billion in June. Economists had forecast a lower figure of EUR 21.4 billion. The latest surplus was the biggest in more than a year.
Employment growth in Eurozone accelerated marginally for the second straight quarter in the three months ended June, figures from Eurostat showed Tuesday. Employment rose a seasonally adjusted 0.3 percent in the second quarter, following a 0.2 percent climb in the previous quarter. In the fourth quarter last year, employment edged up 0.1 percent.
German economic confidence weakened for the sixth consecutive month in September to its lowest level in 10 months, survey data from the Mannheim-based Centre for European Economic Research or ZEW showed Tuesday.
The investor confidence index dropped to 12.1 points in September from 25 in August. The latest reading was the lowest since November 2014, when it was 11.5, and was below the expected score of 18.3.
France’s EU measure of inflation slowed in August even as prices rebounded after declining in July, preliminary figures from the statistical office INSEE showed Tuesday. The harmonized index of consumer prices edged up 0.1 percent year-on-year. Economists had expected the measure to climb at July’s 0.2 percent pace.
U.K. inflation returned to zero in August, as expected, on a renewed decline in oil prices, and factory gate prices continued its downward trend, casting doubt about the ability of the Bank of England to achieve the inflation target.
Consumer prices remained unchanged in August from a year ago, following a 0.1 percent rise in July, data released by the Office for National Statistics showed Tuesday. The slowdown was caused by a fall in fuel prices and slower growth in clothing costs.
UK house price inflation slowed sharply in July to its weakest level in nearly two years, figures from the Office for National Statistics showed Tuesday.
The house price index rose 5.2 percent year-on-year after a 5.7 percent increase in June. In April and May, house price inflation was 5.6 percent. The latest figure was the lowest since September 2013, when house prices rose 3.8 percent.
The material has been provided by InstaForex Company – www.instaforex.com