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Brent Settles Above $108 After A $1 Slide

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Brent Settles Above $108 After A $1 Slide

Brent crude oil steadied at $108.43 at 5:15 GMT on Wednesday morning after falling more than $1.00 on Tuesday as the US Federal Reserve's December policy meeting got underway.

The US central bank began its two day Federal Open Market Committee meeting on Tuesday amid speculation that the bank may taper its bond buying plan in December.

See also: #PreMarket Primer for December 18: Markets Holding Breath Ahead of Fed Outcome

The Fed's $85 billion per month asset buying plan has long supported commodity markets and its removal would drive prices downward. Recently strong US data has made a case for the bank to begin tapering sooner rather than later, but most believe the bank will wait until 2014 to begin cutting down.

Also weighing on Brent prices were strikes at French refineries, which cut into European demand for the commodity. CNBC reported that only one of four French refineries would be able to reopen after five days of strikes. Workers at the nation's 99, 000 barrel per day Grandpuits refinery voted to end their strike on Tuesday afternoon.

However, three more of the nation's refineries remained on strike, cutting the country's refining capacity by 613,000 barrels per day.

The spread between Brent and WTI narrowed as US oil treaded water ahead of the Fed verdict. WTI found some support from speculation that the US Energy Information Administration will publish a report on Wednesday showing a drop in the nation's stockpiles. However, many analysts say that even if the data does show a draw, it may not be an accurate picture of the US' crude appetite since many storage facilities offload at the end of the year in order to avoid taxes.

Posted-In: Federal ReserveNews Commodities Forex Global Pre-Market Outlook Markets Best of Benzinga

 

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