Oil falls below $97 on likely Fed tapering
Oil prices fell Thursday, a day after the Federal Reserve indicated it could begin to wind down its massive stimulus program later this year, as long as the US economy remains on the upswing.
U.S. benchmark oil for July delivery fell $2.08 to $96.16 per barrel by late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange.
The contact dropped 20 cents to finish at $98.24 a barrel on the Nymex on Wednesday, when Fed chairman Ben Bernanke suggested that he was optimistic about the U.S. economy — and that the Fed might start scaling back its massive $85 billion a month government bond purchases later this year if conditions continue to improve.
The Fed’s stimulus program has been a boon to stock and commodities markets, where investors have turned in search of returns that outgun those on bonds.
Analysts said the slump in oil prices could be just a short-term response to a change in U.S. central bank policy. In the medium term, the scaling back of such a loose monetary policy will be “a positive for the oil market, suggesting that the economy is on a sustainable growth trajectory,” said Caroline Bain, lead commodities analyst for The Economist Intelligence Unit.
Separately, the American Petroleum Institute said U.S. crude stocks fell by about 4.3 million barrels for the week ending June 14 to 362 million barrels. That contrasted with figures given by the U.S. Energy Information Administration, which said that crude inventories grew by 300,000 for the week. Analysts expected supplies to drop by 1 million barrels.
Brent crude, a benchmark for many international oil varieties, fell $1.80 to $104.32 a barrel on the ICE Futures exchange in London.
I have faced a lot of challenging incidents in my life. I have... READ MORE
Arabtec posted a Dh774.5 million net loss in 2019, citing weaker... READ MORE
Mubadala, which is doing due diligence, could invest between $500... READ MORE
Company will operate two trading entities, ADNOC Trading (AT) and... READ MORE
'Their problems started in 2014, when the man lost his job' READ MORE
To enable individuals and businesses to overcome credit challenges in ... READ MORE
Oxford University confirms plan to keep testing despite the death of... READ MORE
635,000 passengers have travelled to India from UAE on Vande Bharat... READ MORE