Oil prices hit two-year highs on Wednesday but retreated on Thursday morning, despite the fact that U.S. crude inventories dropped 1.9 million barrels last week, to 457.14 million barrels. U.S. WTI crude futures were trading at $57.88 per barrel as of 2:16 p.m. HK/SIN on Thursday, down 0.24 percent. Brent crude futures were down 0.25 percent to $63.16.
Buoying oil prices somewhat was the closing of the Keystone pipeline which connects oilfields in Canada’s Alberta to the U.S. The closure was prompted by an oil spill in South Dakota last week.
Traders Prepare for Quiet Holiday Trade
The dollar was on the defensive on Thursday morning after declining considerably on Wednesday after widespread speculation that the Federal Reserve’s expected policy tightening may not be as aggressive as originally predicted. The dollar struggled against its primary trading partners, declining slightly against the euro but gaining modestly against the yen, in what is expected to be a slow trading day. The dollar had gained 0.04 percent against the yen to trade at 111.24, still below levels held in recent sessions. The dollar also struggled against the Australian dollar and the Swiss franc on Thursday.
Earlier this week Fed Chair Janet Yellen said that she was uncertain about the inflation outlook, calling into question whether the expected interest rate hikes would, in fact, be forthcoming as quickly as expected. The minutes from the Fed’s last meeting, released Wednesday, confirmed Yellen’s comments, even though December’s impending rate hike is expected to continue as expected.