Brent futures were steady above $110 a barrel today, with investors reluctant to lock in fresh positions ahead of a deluge of data expected in the wake of Washington’s deal to end a partial government shutdown.
With federal workers returning to work, oil investors are awaiting delayed economic indicators to gauge the outlook for US demand.
While Asian shares, the dollar and most other markets cheered the eleventh hour US deal, progress on talks over Iran’s nuclear programme capped gains in crude futures.
Brent crude was unchanged at $110.59 a barrel at 0424 GMT. The November contract, which expired overnight ended 90 cents higher, while the December contract settled up $1.17. US oil fell 7 cents to $102.22 today, after ending $1.08 higher.
“With US Congress postponing the deadline and talks between Iran and Western countries progressing in a very, very positive atmosphere, oil prices could go lower going forward,” said Yusuke Seta, a commodity sales manager at Newedge in Tokyo. “A clear direction for the market will emerge once we start to see the US data delayed due to the shutdown.”
Capping weeks of political brinkmanship that had unnerved global markets, the Senate and House of Representatives each passed the spending measure. President Barack Obama was expected to sign the bill imminently.
But the deal offers only a temporary fix, funding the government until January 15th and raising the debt ceiling until February 7th.
Until clear market direction emerges, oil futures will trade in a narrow range, with Brent swinging between $108.50 and $113 a barrel, Newedge’s Seta said. If Brent breaks below $108.50, its next support is at $107.50, he added.
Investors are now focusing on the outcome of talks between Iran and the world powers over Tehran’s nuclear programme.
The United States described two days of negotiations as the most serious and candid to date after Western diplomats said Iran hinted it was ready to scale back sensitive atomic activities to secure urgent sanctions relief.
Oil prices are also under pressure after data from the American Petroleum Institute (API) showed crude inventories at the Cushing, Oklahoma, hub rose last week for the first time since early July, while overall US crude stockpiles also gained.
US crude stocks rose by 5.9 million barrels in the week to October 11th, the API data showed, more than double forecasts in a Reuters poll of analysts for a build of 2.2 million barrels. (Reuters)
