Oil prices declined today, pressured by demand concerns after the main stock market indexes in the US decline, which was followed by a sell off in key Asian markets. Crude oil futures clawed back some of their losses later in the session, supported by a decline in the US dollar, which made the dollar denominated crude cheaper for holders of other currencies.
It is uncertain whether the Federal Reserve will announce that the US$600 billion stimulus programme will not be extended beyond June at the conclusion of the two day meeting. Meanwhile the interest rates are expected to stay at the current ultra low levels.
Traders appear to be reluctant to go long on oil after Goldman Sachs (NYSE:GS) issued a bearish note on commodities a couple of weeks ago, projecting oil prices to decline soon and encouraging its clients to drop commodities including oil, copper and cotton.
US light, sweet crude for June delivery, which is currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), declined to US$112.05/barrel, while July crude dropped to US$112.49/barrel.
June Brent crude last traded at US$123.91/barrel on the ICE Exchange.
Supermajors Shall (LON:RSDB) and BP (LON:BP) advanced 1.5 percent and 1 percent respectively. Cairn Energy (LON:CNE) declined 1 percent.
Heritage Oil (LON:HOIL) led the midcaps, soaring 8 percent. Salamander Energy (LON:SMDR) and JKX Oil & Gas (LON:JKX) moved in the opposite direction, shedding 3.3 percent and 2.3 percent respectively.
US operating exploration and production company Nostra Terra Oil & Gas (LON:NTOG) and oil and gas sector focused investor Solo Oil (LON:SOLO) led the juniors, soaring 27.5 percent and 20.5 percent respectively.
Explorer and producer focused on EU Northern Petroleum (LON:NOP) and energy sector focused investor Xtract Energy (LON:XTR) advanced 5 percent.