U.S. crude oil ended lower for a second straight session on Monday, as investors looked ahead to this week’s interest rate decision from the Federal Reserve, even as growing concerns that the fighting in Yemen could disrupt crude supplies persisted.
It remains unlikely that the Fed will hike interest rates before July, but markets are looking for some clarity on the timing of tightening when the Fed releases its statement on Wednesday.
Prices have rallied in April amid tensions in the Middle East, including a civil war in Yemen that could interrupt supplies. However, the Wall Street Journal reports that significant outflows from oil ETFs signal that the crude oil price rally may have run out of fuel.
Investors also weighed the falling rig counts in the U.S., fueling concerns of declining domestic output. Oilfield service company Baker Hughes late Friday indicated a drop in U.S. rigs count actively drilling for oil by 33 to 703 rigs from a week ago.
Meanwhile, the Greece situation looks bleak with little progress at resolving the beleaguered country’s financial troubles. Nonetheless, Athens is reportedly making adjustments to its team negotiating with international creditors, after last week’s meeting in Latvia failed to find any agreement.
The country’s alternate foreign minister, Euclid Tsakalotos, will now be leading the negotiating team. The move would reduce the influence of Greek finance minister Yanis Varoufakis on the negotiations.
Light Sweet Crude Oil futures for June delivery, the most actively traded contract, shed $0.16 or 0.3 percent, to settle at $56.99 a barrel on the New York Mercantile Exchange Monday.
Crude prices for June delivery scaled a high of $57.89 a barrel intraday and a low of $56.52.
On Friday, crude oil dropped dropped $0.59 or 1.0 percent, to settle at $57.15 a barrel, even as fighting in Yemen threatens to embroil the entire region, with the ongoing civil war seen as a proxy fight between oil powers Iran and Saudi Arabia.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.80 on Monday, down from its previous close of 96.96 on Friday in late North American trade. The dollar scaled a high of 97.28 intraday and a low of 96.47.
The euro trended higher against the dollar at $1.0882 on Monday, as compared to its previous close of $1.0873 in North American trade late Friday. The euro scaled a high of $1.0927 intraday and a low of $1.0821.
On the economic front, Germany’s import prices continued to decline in March but the pace of decrease slowed for the second month, data from Destatis showed Monday.
Import prices fell by less-than-expected 1.4 percent in March from last year, following a 3 percent drop in February. Prices were expected to fall 2 percent. Nonetheless, the import price index has been falling since January 2013.
Meanwhile, Fitch Ratings downgraded sovereign ratings of Japan citing lack of structural measures to replace the deferred sales tax hike. The credit rating was lowered to ‘A’ from ‘A+’ and the outlook on the rating was stable. Moody’s had downgraded Japan’s rating in December after the government delayed the second sales tax hike.
The material has been provided by InstaForex Company – www.instaforex.com