Oil Slips Ahead of U.S. Supply Data, Outcome of Federal Reserve Meeting

By Georgi Kantchev 

        LONDON--Oil futures fell Wednesday as investors braced for the latest U.S. supply data and the outcome of the U.S. Federal Reserve's policy meeting.
        After rallying earlier in the year, oil prices have fallen more than 20% in recent weeks--the definition of a bear market--as oversupply fears have resurfaced amid persistently high U.S. production, record output from other major producers and the Iranian nuclear deal.
        "We believe the usual fears are at play--up to 1 million barrels a day of increased exports from Iran, rebounding U.S. shale production and a stronger U.S. dollar," said Hamza Khan, analyst at ING. "However, little has changed from a physical perspective to induce such losses."
        Brent crude, the global oil benchmark, fell 0.8% to be at $52.88 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading 0.7% lower at $47.64 a barrel.
        Late Tuesday, the American Petroleum Institute, an industry group, reported that U.S. oil inventories fell by 1.9 million barrels last week. The U.S. Energy Information Administration will release its closely watched inventory report Wednesday, with analysts surveyed by The Wall Street Journal expecting little change from last week when inventories rose by 2.5 million barrels.
        Markets are also focusing on the Federal Reserve, which wraps up its two-day policy meeting Wednesday. While the U.S. central bank is unlikely to start raising short-term interest rates before September at the earliest, officials may drop fresh clues about the outlook for policy.
        The timing of any interest rate rise has an impact on the U.S. dollar which, in turn, affects dollar-denominated commodities such as oil. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, rose 0.1% on Wednesday.
        "With the [Federal Reserve's] statement usually affecting the dollar strength to a large extent, we believe that oil prices would be affected by it," said Daniel Ang, oil analyst at Phillip Futures. "A hawkish statement from the meeting would easily push the USD strength up again, which will inversely push crude prices down."
        Nymex reformulated gasoline blendstock for August--the benchmark gasoline contract--fell 0.8% to be at $1.7894 a gallon. ICE gasoil for August changed hands at $486.50 a metric ton, down $9 from Tuesday's settlement.
        Write to Georgi Kantchev at georgi.kantchev@wsj.com
        (END) Dow Jones Newswires

        July 29, 2015 05:59 ET (09:59 GMT)

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