Oil largely unchanged despite rise in crude stocks

US crude oil prices held fairly steady this afternoon in New York in spite of a report showing an increase in US inventories, as attention remained focused on the FOMC meeting.

US light crude oil futures dipped 0.1% to stand at $98.57 per barrel shortly before the monetary policy decision from the Fed and slipped further to $98.33 after the Fed’s decision to keep its monthly asset purchases unchanged.

Data released from the statistical arm of the US Energy Department showed a surprise increase in crude oil stocks last week, which is a bearish sign, all other things being equal, but the range in which the price of crude traded was constrained by caution ahead of the Fed’s decision.

The Energy Information Administration revealed that crude inventories rose by 313,000 barrels last week to 394.1 million barrels, confounding the expectations of analysts who had forecast a drop. The US continues to be very well supplied with oil, with the current level not too far away from the 82-year high of 397.6 million barrels that was reached at the end of May.

In spite of this, prices have been creeping up towards the $100 per barrel mark, with geopolitical concerns helping support the price.

Even with tension over the Middle East, a large driving force in the price of crude has been the action of the Fed. The Fed’s decision to maintain its stimulus for now should provide some support to oil in the short-term, but worries about when the Fed will take its foot off the pedal may pressure prices at some point.

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