Crude oil futures were little changed this morning in Asia as the futures consolidated above $87 a barrel on the gains recorded on Monday with the gradual improvement in the sentiment and unwinding of pessimism over the recovery outlook.
Crude oil futures for October settlement opened today at $87.50 a barrel recording the high of $87.70 and the low of $87.29 and currently hovering around $87.38 a barrel in tight range trading.
Gains seen for Asian equities today bolstered the appeal of commodities and higher yielding assets and investors grow less wary of the recovery pace, helping crude oil maintain yesterday’s 2.2% rally.
Asian stocks advanced and haven currencies declined on expectations the global economy will continue its recovery. The dollar was little changed this morning with slight upside gains according to the dollar index which pressured oil to trade within a tight range after the gains seen on Monday. The index is currently trading around 73.69 recording the high of 73.72 and the low of 73.60.
Crude oil was bolstered since Bernanke’s Friday comments, where the Fed chairman refrained from announcing new stimulus measures assuring that the outlook is optimistic and the economic state is not dire to require immediate reaction which started to ease the woes across the board.
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Further support came with the start of the week on Monday with the income report beating expectations on better than expected consumer spending, supporting expectations for the recovery to continue and for crude oil demand to rebound.
Investors now eye inventory status data from the United States after the return of the East Coast refinery operations after Hurricane Irene. The EIA report tomorrow might show a buildup in crude oil inventories with the confirmed release of strategic reserves yet still supporting oil with the expected decline in gasoline inventories.
Choppy trading might be seen today after the gains recorded in the past two sessions while the focus will be on the FOMC minutes for more clues over possible monetary action from the Fed after they pledged last meeting to hold rates at their historic low till at least mid 2013.