Brent Stanches Post-EIA Losses, Stays Pinned Under $100
Oil pared losses after losing more than $3 a barrel but remained lower and below $100 a barrel on Wednesday as soft economic data from China darkened the outlook for global demand, and the United States saw a record level of U.S. crude oil stocks.
Brent crude futures pared earlier losses but was still down more than $2 on the day, pinned below $100 a barrel in late trading.
Crude stocks in the U.S. rose by 6.7 million barrels last week to a record 395.3 million barrels, data from the Energy Information Administration showed, far exceeding forecasts of a 1 million-barrel build and further pressuring U.S. oil prices.
U.S. light, sweet crude was down more than $2 under $91 a barrel. It earlier reached a low of $90.11, falling through its 50-day, 100-day, and 200-day moving average, key technical indicators watched by traders.
Traders are now waiting for an announcement at 2 p.m. EDT (1600 GMT) from the U.S. Federal Reserve on its monetary policy going forward.
"We got down to support near $90, then we saw a little short covering ahead of the Fed report coming out," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.
The contract slid 7 percent in April, its biggest monthly drop in 11 months, on the back of indicators suggesting the global economy remains in a fragile state.
Doubts About Growth
Growth in China's manufacturing sector unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.
"China's manufacturing data was a big miss, and obviously when China speaks, we listen," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.
In the United States, the pace of manufacturing growth slowed in April as the sector expanded only modestly, an industry report showed, adding to signs the economy cooled as the second quarter got underway.
Figures on private-sector jobs growth also came below market expectations, two days before the government's closely watched non-farm payrolls data.
A two-day Federal Reserve committee meeting is set to wrap up later on Wednesday, and the Fed is widely expected to maintain its stimulus policy to support an economic recovery that is still too weak for the job market to truly heal.
The ECB is widely expected to cut interest rates to a new record low of 0.5 percent after data showed inflation in the euro zone had fallen to a three-year low and unemployment had hit a record of 12.1 percent.
Fundamentals also appeared bearish.
Supply from the Organization of the Petroleum Exporting Countries is predicted to average 30.46 million barrels per day (bpd)in April, up from 30.18 million bpd in March, a Reuters survey showed.
The Buzzard oilfield in the North Sea, an important contributor to the Brent crude benchmark, was on schedule to restart later on Wednesday, trade sources said, after a steam release caused the field to be shut down on Monday.