Forexpros – Crude oil futures dropped in Asian trading Wednesday after investors sold the commodity in wake of Federal Reserve Chairman Ben Bernanke’s testimony before the U.S. Senate Banking Committee, where he offered no new clues as to whether the economy needed monetary stimulus.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD89.31 a barrel on Wednesday, down 0.25%, off from a session high of USD89.34 and up from an earlier session low of USD89.25.
Despite a slew of disappointing economic indicators, including poor monthly jobs reports, weak consumer sentiment figures and dismal retail sales numbers, Bernanke told lawmakers the Fed is ready to act via stimulus measures should conditions merit, which apparently wasn’t today.
“Reflecting its concerns about the slow pace of progress in reducing unemployment and the downside risks to the economic outlook, the Committee made clear at its June meeting that it is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” Bernanke told lawmakers earlier, according to a copy of his speech.
The news sent oil falling, as monetary stimulus tools such as quantitative easing tend to weaker the dollar and make oil a nicely priced commodity in dollar-denominated exchanges.
However, the commodity saw support on the notion as no decision for Fed intervention means the economy continues to show some signs of recovery on its own, which curbed oil’s losses.
Furthermore, geopolitical tensions grabbed headlines when the U.S. and Israel stated they were on the same page to prevent Iran from developing a nuclear weapons program.
Nerves were slightly on edge after a U.S. Navy fuel ship shot a boat off the United Arab Emirates headed for it at high speed, ignoring warnings to halt its advance.
There was no indication at the time Iran was involved, though the incident served as a reminder how quickly geopolitical tensions can roil markets.
On the ICE Futures Exchange, Brent oil futures for September delivery were down 0.18% and trading at USD103.35 a barrel, up USD14.04 from its U.S. counterpart.
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