U.S. crude oil snapped a four-day winning streak to end lower Tuesday, ahead of the Federal Open Market Committee policy meet outcome, even as the dollar strengthened against a basket of major currencies. Investor focus was also centered on the upcoming weekly U.S. crude stockpile report which is expected show an increase in inventories.
The outcome of the Federal Reserve meeting later this week is expected to end speculations over the quantitative easing program. Last week, speculations were rife that the Federal Reserve may pull back its monetary easing policy with San Francisco Federal Reserve President John Williams indicating the move as early as this summer, and even possibly exit the program by the year end.
However, oil recovered some ground after St. Louis Fed President James Bullard earlier Tuesday indicated there might be no scale-down of the Fed's quantitative easing program, considering the low level of inflation.
Light Sweet Crude Oil futures for July delivery, the most actively traded contract, dropped $0.75 or 0.8 percent to close at $96.18 a barrel on the New York Mercantile Exchange Tuesday.
Crude prices for July delivery scaled a high of $97.22 a barrel intraday and a low of $95.72.
Yesterday, oil settled higher for a fourth straight session after some upbeat macroeconomic data out of the U.S. weakened the dollar against a basket of currencies.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 83.85 on Tuesday, up from 83.76 late Monday in North American trade. The dollar scaled a high of 84.20 intraday and a low of 83.65.
The euro traded higher against the dollar at $1.2899 on Tuesday, as compared to $1.2882 late Monday in North America. The euro scaled a high of $1.2920 intraday and a low of $1.2842.
In economic news, U.K. consumer price inflation slowed more-than-expected to a seven-month low in April on falling petrol and air fares, official data revealed Tuesday. Annual inflation dropped to 2.4 percent from 2.8 percent in March, while analysts expected inflation to ease 2.6 percent.
Germany's producer price inflation slowed for the third consecutive month in April, data from the Federal Statistical Office showed Tuesday. Producer prices rose only 0.1 percent in April from a year ago, following a 0.4 percent increase in March. This was the lowest annual rate since March 2010. Economists had forecast an increase of 0.2 percent for April. On a monthly basis, producer prices slipped a more-than-expected 0.2 percent, the same rate of decrease as in March. It was forecast to fall 0.1 percent.
Meanwhile, provisional estimates showed the Organization for Economic Cooperation and Development area expanded in the first quarter, with GDP rising 0.4 percent sequentially, after coming in flat a quarter ago.
Real GDP growth accelerated in Japan and the United States to 0.9 percent and 0.6 percent respectively, compared with 0.3 percent and 0.1 percent in the previous quarter. In the United Kingdom and Germany, GDP grew by 0.3 percent and 0.1 percent respectively, rebounding from the contractions of 0.3 percent and 0.7 percent in the previous quarter. The pace of contraction slowed in the euro area to -0.2 percent from -0.6 percent.
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