Crude oil prices mixed in Asian trade

Oil prices were mixed in Asian trade today as dealers focused on the US Federal Reserve’s policy meeting this week in anticipation of further stimulus pullback.

New York’s main contract, West Texas Intermediate (WTI) crude for March delivery, was up seven cents at $96.71 in mid-morning trade, while Brent North Sea crude for March delivery eased 34 cents to $107.54.

Tan Chee Tat, investment analyst at Singapore-based Phillip Futures, said investors were sitting on the sidelines amid “heightened anticipation that they (the Fed) will further engage in tapering’’.

FOMC meet

Markets are waiting to see if the US central bank’s Federal Open Market Committee (FOMC) will cut another $10 billion from monthly asset purchases when it meets on Tuesday and Wednesday.

In December, the FOMC had said that it would begin tapering the stimulus by $10 billion to $75 billion a month in January.

“If they were to taper, in the short term, it is likely to hurt the demand for crude oil,” Tan said.

Fed stimulus taper

The so-called tapering of the Fed’s asset purchases would likely boost the greenback, making dollar-priced oil more expensive for countries using other currencies.

But Tan said in the long-term, the move would signal “better prospects for crude oil” as it indicated the Fed’s confidence in the US economy, which would translate into stronger demand.

He added that investors were also closely monitoring the developments following the recent opening of the Southern leg of the controversial Keystone XL pipeline in the United States.

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