Brent crude pares gain as stimulus hopes ease
By Robert Gibbons
NEW YORK (Reuters) - Brent crude pared gains on Thursday as revived hopes for more stimulus from the U.S. Federal Reserve faded and doubts about Europe's ability to address its debt crisis crept back in focus.
Brent prices turned lower before settling 10 cents higher, and ended post-settlement trading in the red. U.S. crude prices retreated more than 1 percent and settled below the 200-day moving average after jumping to their highest since May.
"The market was looking exhausted at these higher levels after rallying for almost two months," said Michael Korn, energy broker at Skokie Energy in Princeton, New Jersey.
"It's too early to say if the rally is over, but with the equity market pulling back today on signs another round of quantitative easing might not be imminent, it's not surprising to see crude oil falling back as well," Korn added.
Oil's rally the last two sessions was sparked after investor hopes for more Fed stimulus were reinforced when minutes from the latest policy meeting, released on Wednesday, suggested the central bank would be likely to act, "fairly soon" unless the economy improves considerably.
But St. Louis Fed President James Bullard on Thursday dampened expectations for more easing with comments that the minutes were "a bit stale" and data had improved since then.
The euro pared gains against the dollar due to tough talk from the Dutch finance minister and German Chancellor Angela Merkel on staying firm about requiring austerity in order for debt-stricken Greece to get bailout funds.
A weaker dollar is usually supportive to dollar-denominated oil prices. Continued...