Oil prices drop after FOMC and ECB disappoint

 Thursday, August 02, 2012
Oil prices drops today after the results of this week’s policy meetings of the Federal Reserve and the European Central Bank (ECB) failed to meet expectations.
The Federal Reserve refrained from more bond buying and pledging to keep interest rates low beyond 2014, while the ECB left its interest rates unchanged.
However, Fed chairman Ben Bernanke indicated that the central bank could provide additional accommodation if necessary and ECB president Mario Draghi said action would be taken to address what he said was severe malfunctioning of Europe’s debt markets.
Today’s US data provided little support to crude oil futures and other riskier assets.
Initial claims for unemployment benefits rose 8,000 to 365,000 last week, a report from the Department of Labor showed this afternoon, while the Commerce Department said orders for factory goods declined 0.5 percent in June.
Analysts polled by Reuters expected to see a 0.5 percent increase in US factory orders.
Traders are now looking to Friday's key non-farm payrolls data for July.
In the meantime, yesterday’s inventories data was bullish for crude prices with the Department of Energy reporting a massive drawdown of 6.5 million barrels for the week to July 27, while expectations were for a decline of 1.1 million barrels.
On Tuesday, the American Petroleum Institute (API) said America’s crude stocks dropped 11.6 million barrels last week.
US light, sweet crude for September delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), dropped US$1.12 to US$87.79/barrel this afternoon.
September Brent crude fell 18 cents to US$105.78/barrel on the ICE Exchange.
Today’s top risers in the oil and gas sector were:
Argos Resources (LON:ARG), up 9 percent at 16.4 pence at midday
Rockhopper Exploration (LON:RKH), up 6.5 percent at 193.3 pence
Gulf Keystone Petroleum (LON:GKP), up 4.5 percent at 196.75 pence
Borders & Southern Petroleum (LON:BOR), up 3.5 percent at 17.4 pence
Gulfsands Petroleum (LON:GPX), up 3 percent at 113.5 pence
Volga Gas (LON:VGAS), up 2.5 percent at 84 pence
The top fallers were:
Ophir Energy (LON:OPHR), down 10 percent at 523.95 pence at midday
Oilex (LON:OEX), down 5 percent at 5 pence
Lochard Energy (LOPN:LHD), down 4.5 percent at 17.75 pence
Regal Petroleum (LON:RPT), down 4 percent at 13.74 pence