Trader Michael Hagis works on the floor of the New York Stock Exchange Tuesday, June 11, 2013. Stocks are falling in early trading on Wall Street, following global markets lower after the Bank of Japan declined to take further action to shore up that country’s financial system. AP/Richard Drew
SINGAPORE—Oil prices fell in line with Asian equities on Wednesday following the Bank of Japan’s decision to hold off unveiling any fresh economic stimulus, analysts said.
New York’s main contract, light sweet crude for delivery in July dropped 61 cents to $94.77 a barrel and Brent North Sea crude for July delivery shed 39 cents to $102.57 in mid-morning trade.
“Inaction on the BoJ’s part suggests that there may be less monetary stimulus in the future,” Desmond Chua, market analyst at CMC Markets in Singapore, told AFP.
“The market is reacting to fears that various governments will end stimulus measures. This has caused a pullback in prices,” said Victor Shum, managing director at IHS Purvin and Gertz in Singapore.
Global investors were sent running after the BoJ said Tuesday the Japanese economy was “picking up”, but while it warned of possible headwinds caused by weakness in key export markets it chose not to add to April’s giant bond-buying splurge.
The decision reignited concerns about the role of central banks in supporting the economy, with the US Federal Reserve signalling it wanted to draw up a plan to wind down its own huge $85 billion-a-month stimulus scheme.
Oil prices had fallen earlier in the week after the Organization of the Petroleum Exporting Countries (OPEC) slightly lowered its 2013 global demand outlook, while disappointing economic data in China added to jitters.
In its June oil market report released Tuesday, OPEC estimated 2013 global demand at 89.65 million barrels per day, down from the prior month’s forecast of 89.66 million.