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Crude oil steady ahead of Fed decision, Middle East tension

ecPulse
2013-06-18 15:29PM UTC
Crude oil prices steadied around its opening levels at $97.90 in afternoon trading as investors ponder the Fed’s monetary policy decision tomorrow on whether it will alter its record stimulus program. Light sweet crude oil futures for June delivery were at $ 97.93 per barrel at 11:21 a.m. ET, having earlier hit a high of $98.41 and a low of $97.40 per barrel. Oil prices gained ahead of the Fed`s policy meeting which will conclude Wednesday. The market is on edge as it is uncertain whether the economy can support itself if the Fed tapers its easy-money policies. The central bank`s $85-billion-a-month bond-buying program has so far propped up the U.S. economy, the world`s largest consumer on oil. Stronger economic growth typically leads to greater energy use by businesses and oil demand from motorists. Oil traders have paid close attention to actions by the central bank throughout the U.S. economic recovery. But they have been particularly interested since Fed Chairman Ben Bernanke`s announcement in May that the central bank could reduce its bond purchases in the next few meetings amid a slowly improving U.S. economy. Middle East Also pushing prices higher in recent days have been concerns about disruptions to global supplies after the U.S. decided to play a more active role in the Syrian conflict. Last week, the U.S. administration decided to arm Syrian rebels in their two-year-old civil war. Meanwhile, Russia has continued support of Syrian president Bashar al-Assad, and differences between the U.S. and Russia over their involvement in the Syrian civil war has also kept investors on edge. Although Syria is not a major oil producer, military expansion in the country has the potential to spill over to neighboring countries, disrupting oil supplies in the oil-rich Middle East region.

U.S. stocks open higher after subdued inflation data

Fx News Today
2013-06-18 14:18PM UTC

U.S. stocks opened higher Tuesday after U.S. housing starts and consumer inflation rose below estimates last month as investors await the end of the Federal Open Market Committee meeting tomorrow.

The Dow Jones Industrial Average rose 0.39% or 59.12 points to 15238.13 points. The S&P 500 gained 0.24% or 4.00 points to 1642.99 points. The NASDAQ composite index climbed 0.33% or 11.39 points to 3463.50. As of 10:00 a.m. ET

The consumer price index for May increased a less than expected 0.1% on the month, while it rose 0.2% when excluding the food and energy components, which was in line with economists’ predictions.

May housing starts rose 6.8% to a seasonally adjusted annualize rate of 914,000. That was below expectations for a 11.4% rise to a seasonally adjusted annualized rate of 950,000. The number of new building permits.

Investor worries over whether the Fed intends to maintain or start winding down its asset-purchase program were highlighted in afternoon trading on Monday. The Dow pared an early gain of as much as 192 points down to about 42 points, before bouncing into the close, after news reports raised worries that the Fed may signal a tapering of asset purchases.

European markets seesawed around unchanged levels in muted trading as investors waited Bernanke, with the Stoxx Europe 600 last up 0.1%. Separately, European Central Bank President Mario Draghi said he would not hesitate to use interest rates and non-standard measures to bolster the euro-zone economy.

Front month July crude-oil futures rose 0.35% to $98.20 a barrel, while June gold futures lost 0.7% to $1,373.10 an ounce. The dollar gained ground against both the yen and the euro.

CPI Data

Fx News Today
2013-06-18 13:34PM UTC

US CPI for May came in lower than projected at 0.1% from -0.4%; below the projected reading of 0.2% while that for the year ending May it came in as expected at 1.4% from 1.1% while that the Core CPI for May came in as projected at 0.2% from 0.1% and came in unchanged and as forecasted for the year ending May at 1.7%.

US worse than projected housing starts

Fx News Today
2013-06-18 13:36PM UTC

The US housing starts came in below the projected reading of 950 thousand  or 11.4% at 914 thousand or 6.8% for May from a prior revised reading of 856 thousand or -14.8% from 853 thousand or -16.5% while that the building permits for May came in lower as well at 974 thousand or -3.1%; below the market projections of 975 thousand or -3.0% from a prior revised reading of 1005 thousand or 12.9% from 1017 thousand or 14.3%.