Oil prices decline ahead of US Federal Reserve meeting where investors are expected to eye cues from Ben Bernanke on the second Quantitative Easing programme expected to complete at the end of this month.
Oil down ahead of Fed meet
Oil declined yesterday ahead of the second day of a US Federal Reserve meeting expected to acknowledge renewed weakness in the US economy.
Brent crude for August lost 29 cents to US$110.66 a barrel in afternoon trading after rising early in the day to as much as $111.69. US light crude oil slipped to a low of $93.24 a barrel.
The Fed's open market committee's two-day meeting was due to end late yesterday. It was the committee's first meeting since US economic data started to take on a decisively weaker tone last month.
By the end of this month, the Fedis expected to complete its second round of quantitative easing - often referred to as QE2 - in which it is buying $600 billion worth of treasury bonds to push interest rates lower and kick-start the economy. The bond-buying programme has come under fire from critics who say it has inflated commodity prices.
"No one wants to take any risk at the moment with worries over the end of the quantitative easing programme expected to come to a close at the end of a month," said Sachin Mohindra, the lead manager at Invest AD's GCC-Focused Fund.
"Consensus seems to think that QE will continue but no one wants to take additional oil positions ahead of the announcement."
Local equities were mixed yesterday after the index compiler MSCI said it would extend the deadline for the potential upgrade of the UAE to "emerging-market" status.
The country is currently considered a "frontier market".
The Dubai Financial Market General Index was down 1.8 per cent to 1,549.61 points, the lowest in a month. The Abu Dhabi Securities Exchange General Index was unchanged at 2732.54 points.