Oil slips below US$106 a barrel as Federal Reserve debates monetary policy
Sep 18, 2013 / 5:40 am
The price of oil slipped one per cent Tuesday as investors prepared for an expected reduction in the U.S. Federal Reserve's monetary stimulus.
Benchmark West Texas Intermediate crude for October delivery fell $1.17, or 1.1 per cent, to close at US$105.42 a barrel on the New York Mercantile Exchange after having fallen $1.62 on Monday.
The central bank has been buying financial assets, such as bonds, in an attempt to push down interest rates and make loans more easily available. Global stocks and commodities surged as the new money generated by the program â€” currently running at $85 billion a month â€” flowed through the financial system.
But recent data have shown the U.S. economy is in better shape, which may convince Fed members that it is time to wind down the stimulus â€” so-called tapering â€” at the end of a two-day policy meeting on Wednesday.
Developments in Syria and Libya also put downward pressure on oil prices. Negotiations between Russia and the U.S. on Syria's chemical weapons have removed the threat of an imminent U.S. military strike. And reports have signalled the return of more Libyan crude oil to the market, after a slowdown in production and exports.
Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Energy Department data for the week ended Sept. 6 are expected to show a decline of 1.5 million barrels in crude oil stocks, while gasoline stocks are expected to remain unchanged, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The contract for November delivery for Brent crude, the benchmark for international crudes used by many U.S. refineries, dropped $1.88 to US$108.19 a barrel on the ICE Futures exchange in London.
In other energy futures trading in New York, wholesale gasoline fell six cents to US$2.66 a U.S. gallon (3.79 litres), heating oil declined seven cents to US$3 a gallon and natural gas rose one cent to $3.75 per 1,000 cubic feet.
(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)
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