Oil exchange traded funds reversed earlier gains Wednesday to close with losses of more than 2% thanks to a late-day pullback.
Oil ETFs fell after markets digested the Federal Reserve’s Beige Book report and the latest news on the Eurzone debt saga.
U.S. Oil fund (NYSEArca: USO) was down 2.43% at Wednesday’s close, Powershares DB Oil Fund (NYSEArca: DBO) was down 2.38% and USCommodity 12 Month Oil (NYSEArca: USL) closed down 2.51%.
Crude futures dropped to around $86 a barrel.
The Department of Energy announced a significant drop in crude oil stockpiles, reports Andrea Tse for The Street.
“A large drop in imports has brought a huge draw to crude stocks,” Matt Smith, commodity analyst at Summit Energy, a subsidiary of Schneider Electric, said.
However, oil prices reversed course after the Fed Beige Book revealed that companies are doubting the strength of the U.S. recovery and the divide between France and Germany on the bailout plan, reports Mark Shenk for Bloomberg.
“Markets are being hurt by questions about European plans to combat the debt crisis and the release of the Beige Book,” Phil Flynn, vice president of research at PFGBest, said. “The market is incredibly fickle right now. It takes very little to get it to reverse direction.”
U.S. Oil Fund
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Max Chen contributed to this article.