Brent crude oil slipped on Wednesday after data from the US backed up the Federal Reserve's plan to pare its stimulus program later this year as the nation strengthened. The commodity traded at $100.83 at 8:00 GMT on Wednesday morning as the dollar strengthened Crude oil has taken a massive hit over the past few weeks after the Fed announced it would be rolling back its $85 billion per month bond buying plan towards the end of the year. The decision marks the end of cheap central bank money which has propped up commodity prices.
Data from the US showing that orders for durable goods had risen, coupled with higher consumer confidence and the largest jump in housing prices in seven years all contributed to a stronger dollar. The encouraging figures confirmed that the US economy was on the upswing and would be ready to stand alone without the Fed's stimulus by mid 2014, when the bank plans to completely wrap up the program.
Although the US economy seems to be picking up, demand for the commodity is still expected to remain low as sluggish growth in both China and Europe weighs on oil demand while the two try to recover from economic slowdowns. Moving forward, investors will be watching for weekly crude stockpiles data, which is expected at 2:30 GMT. According to the Wall Street Journal, the US Energy Information Administration data is expected to show US oil inventories have fallen by 1.7 million barrels. The information is considered to be a good indication of US oil supply and demand.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Copyright Benzinga. All rights reserved.