Brent Dips Below $107 As FOMC Minutes' Release Approaches
Brent crude oil dipped below $110 on Wednesday as the release of the US Federal Reserve minutes drew nearer. The commodity traded at $109.65 at 7:27 GMT, reflecting investors' jitters about the Fed's decision to trim stimulus spending.
The Fed's $85 billion per month stimulus spending has helped keep commodity markets afloat in recent years, so the threat of its removal has put significant pressure on prices. Mixed signals from the US central bank as well as hot and cold economic data have made it difficult to pinpoint a start date for the Fed to begin trimming the quantitative easing program.
Most are betting on September as a starting point, which is quickly approaching. Investors are hoping that the Fed's minutes released later in the day will provide some insight into the timing of the roll back.
Supply concerns in Libya and Egypt mitigated some of the losses due to uncertainty about the Fed's stimulus. OPEC member Libya is still operating at about half of its 1.2 million barrels per day export capacity due to labor strikes and civil unrest. CNBC reported that the head of Libya's Petroleum Facilities Guard claimed the striking workers at one of the nation's oil ports fired gunshots at civilians resulting in at least one injury.
The political crisis in Egypt has shown no signs of easing after several bloody clashes between the Egyptian military and the Muslim Brotherhood ended with more dead and little forward progress. With tension in the nation heating up, many are worried about a domino effect with other oil producers in the region. Although Egypt itself is not rich in oil, the nation houses the Suez Canal, where much of the world's oil passes through.
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