Brent Prices Near $109 Ahead Of Inventory Data
Brent crude oil was steady near $109 as investors anxiously awaited the European Central Bank policy meeting, scheduled for Thursday.
The commodity traded at $108.95 at 6:15 GMT on Wednesday morning ahead of US stockpile data due out later in the day.
The ECB meeting is a highlight on this week’s economic calendar as most investors are expecting the bank to make a bold move in order to revive the region’s sputtering recovery. So far this week, economic reports have been disappointing, putting further pressure on the bank.
The region’s PMI figures, released on Monday, showed that factory activity across the region declined and even Germany’s momentum reduced. Even more troubling was inflation data released on Tuesday which surprised analysts by falling in May.
The bloc’s already dangerously low 0.7 percent reading in April dropped to 0.5 percent in May, a cause for concern across the region.
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The poor data helped solidify expectations that the bank will ease further, but the question on everyone’s mind is how the bank will do it.
The bank will likely consider cutting its main interest rate, taking its deposit rate below zero, a quantitative easing program similar to that in the US, or some combination of the three.
Meanwhile, investors were looking forward to a US oil inventory report from the Energy Information Administration to confirm the American Petroleum Institute’s report that crude stockpiles fell more than expected in the week ending on May 30.
Reuters reported that API data showed that US stocks fell by 1.4 million barrels last week, far surpassing expectations of a 300,000 barrel drop.
Simmering tension in Ukraine is also on the markets’ radar as the relationship between the West and Russia continues to deteriorate. President Barack Obama announced that the US was planning to spend $1 billion on increasing military support in eastern Europe as violence between rebels and the military continued in Ukraine.
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