Price of oil falls below $97 a barrel after Federal Reserve says stimulus pullback likely
BANGKOK (AP) -- 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 U.S. 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.
In other energy futures trading on the Nymex:
- Wholesale gasoline rose 1 cent to $2.89 a gallon.
- Heating oil fell 5 cents to $2.92 per gallon.
- Natural gas fell 2.6 cents to $3.937 per 1,000 cubic feet.