U.S. crude oil futures closed lower Tuesday, on continued worries over demand growth while the dollar pushed ahead following the release of Federal Reserve policy meeting minutes. Crude prices reacted sharply to an early read of the minutes that suggest little in way of quantitative easing, with indications that members discussed little or nothing on further stimulus.
Light Sweet Crude Oil futures for May delivery, dropped $1.22 or 1.2 percent to close at $104.01 a barrel on the New York Mercantile Exchange Tuesday.
Crude prices scaled a high of $105.18 a barrel intraday and a low of $103.59.
Yesterday, crude prices rebounded from a 6-week low, gaining over 2 percent, on some positive U.S. economic data on manufacturing sector activity, while the dollar turned lower paring early gains against a basket of major currencies.
A divided Federal Reserve debated the outlook for the United States economy, but refrained from much discussion on a third round of quantitative easing, according the minutes of the central bank's most recent policy making meeting. The Fed held interest rates at effectively zero and reiterated their conditional pledge to keep rates low through late 2014.
Most members saw the U.S. economy expanding moderately despite the "temporary" effects of higher gasoline prices. The Fed expects energy prices to level out in the second half of this year, resulting in subdued inflation in 2012 and 2013.
Following the release of the Fed's policy meeting minutes, the dollar index, which tracks the U.S. unit against six major currencies, moved up to 79.151 on Tuesday, up from 78.973 in North American trade late Monday. The greenback earlier traded at 78.848 just ahead of the minutes. The dollar scaled a high of 79.24 intraday, with a low of 78.66.
The euro was trading lower against the dollar at $1.3317 on Tuesday, as compared to $1.3334 late Monday. The euro had scaled a high of $1.3367 intraday with a low of $1.3300.
In other economic news from the U.S., the Commerce Department figures put the February estimate of new manufacturing orders at $468.4 billion, a 1.3 percent increase from January levels. And while most economists had predicted a rebound following the 1.1 percent decline in January - initially reported as a 1 percent decline - many had hoped for a slightly more robust 1.5 percent increase.
Elsewhere, euro zone producer price inflation eased to 3.6 percent year-on-year in February from a revised 3.8 percent in January, Eurostat said. The inflation rate, nonetheless, stayed above the consensus forecast of 3.5 percent. On a monthly basis, the industrial producer price index climbed 0.6 percent, following a 0.8 percent gain in January. Economists were expecting an increase of 0.5 percent.
by RTT Staff Writer
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