Brent Steady Ahead of Fed Meeting
Brent crude oil traded steadily above $107 as the two day US Federal Reserve meeting got underway. The commodity traded at $107.34 at 6:34 GMT on Tuesday morning as investors proceeded with caution.
A recent announcement by Fed Chairman Ben Bernanke that the bank would soon taper its $85 billion per month stimulus spending plan rocked markets and sent the dollar on a roller coaster ride; which caused volatility in the commodity market. Since then, the bank has reassured investors that it will continue with accommodative monetary policy as need be.
The back and forth has led investors to make their own predictions as to when the Fed will roll in its stimulus; and most are betting on September. At the bank's meeting this week, investors are hoping for confirmation or denial that the bank will begin to cut its stimulus in September.
Investors are also looking to official manufacturing data from China this week that could show the nation's manufacturing sector contracted in July. If the surveys confirm a slowdown, it will likely weigh on Brent prices as it signals weakening demand in the world's number two oil consumer.
Losses due to demand concerns were mitigated by recent supply constraints as geopolitical tension in the Middle East threatens the region's stability. Reuters reported that an Islamist party office in Tripoli was attached on Monday, and fighting in Benghazi claimed the life of another soldier. The ongoing violence is a result of the assassination of political activist, Abdulsalam Al-Mesmari, who was killed in Benghazi on Friday.
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