Crude lower in Asia ahead of Fed, ECB meetings

July 31, 2012
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Crude markets were expecting additional stimulus to be announced during the two-day Federal Reserve meeting which starts Tuesday as well as at the ECB meet on Thursday, analysts said/FILE
Singapore, Jul 31 – Crude was down in Asia Tuesday as wary traders looked to meetings this week by the Federal Reserve and European Central Bank (ECB) for market leads, analysts said.

New York’s main contract, light sweet crude for delivery in September, was five cents lower at $89.73 a barrel and Brent North Sea crude for September delivery shed 11 cents to $106.09.

Crude markets were expecting additional stimulus to be announced during the two-day Federal Reserve meeting which starts Tuesday as well as at the ECB meet on Thursday, analysts said.

But markets were tempering their optimism with “worries that expected stimulus from the United States and Europe may fail to lift their economies”, Phillip Futures stated in a commentary.

In Europe in particular, expectations the ECB would resume its bond purchase program were met with a tinge of caution, IG Markets said in a report.

“While there was an air of optimism about the willingness of European policymakers to act to stabilise the bond markets, on the ground there is still an underlying sense of unease,” it stated.

Data issued by the ECB on Monday suggested the bank had last week opted not to resume its programme of buying up bonds of eurozone nations — for the 20th week in a row.

The ECB launched its bond-buying blitz under the Securities Market Programme (SMP) in 2010 to help debt-wracked eurozone countries that were finding it difficult to drum up financing in capital markets.

But the SMP has lain dormant since February following the ECB’s moves to pump more than one trillion euros ($1.23 trillion) into the banking system via three-year funding operations in December and February.

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