Brent Reacts To Rising Dollar
Brent crude oil fell lower on Thursday after the U.S. Federal Reserve finished tapering its bond buying program on Wednesday, propping up the dollar.
The commodity traded at $86.70 at 8:30 GMT with the positive outlook in the U.S. providing some strength.
On Wednesday, the Fed wrapped up a two-day policy meeting and announced that it had withdrawn the final $15 billion worth of bond purchases included in its quantitative easing package.
Now that the taper is complete, the next big question on investors’ minds is how soon the bank will raise interest rates. The Fed’s forward guidance assured investors that rates will remain low for a “considerable time.” The bank’s remarks have most speculating that the rate hike will come sometime in mid-2015.
While the end of the Fed’s bond buying propped up the dollar and in turn was negative for commodities priced in the greenback, the bank’s decision also increased confidence in the U.S. economy, which was positive for Brent prices.
With the world’s largest oil consuming nation on a steady path to recovery, most expect to see demand pick up.
Brent also found support from U.S. inventory data showing that the nation’s crude stockpiles increased less than expected in the week ending on October 24.
CNBC reported that the Energy Information Administration’s data showed that U.S. crude inventories were up 2.1 million barrels last week, far below analysts’ expectations for a 3.4 million barrel jump.
Moving forward investors will turn their attention to economic data due out later in the day, including a U.S. GDP report that is expected to show that the nation’s economic growth stumbled in the third quarter.
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