Oil below $107 as Fed policy signal awaited
BANGKOK — The price of oil fell again Tuesday, slipping below $107 a barrel, as traders wait for the U.S. central bank to signal when it will start scaling back its monetary stimulus.
Benchmark oil for October delivery was down 34 cents to $106.52 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The September contract fell 36 cents to settle at $107.10 on Monday.
Evidence that the U.S. economy is improving has led to speculation that the Fed will begin to reduce its $85 billion a month in asset purchases as early as September. The bond-buying program was initiated as a way to help the U.S. economy recover from a tough recession following the 2008 financial crisis.
The Fed’s stimulus policy has lowered interest rates and made oil and other commodities a more attractive investment by offering potentially higher returns. A “tapering” or phasing down of the program, expected as early as next month, could push oil prices down.
Global stock markets have been retreating in recent days as investors scurry to the sidelines to wait out the uncertainty. Traders were awaiting the release of the minutes from the Fed’s July policy meeting for hints of whether and when the bank might begin cutting back on its bond-buying.
Brent crude, which is used to price imported crude used by many U.S. refineries, fell 38 cents to $109.52 a barrel for October delivery on the ICE Futures exchange in London.
In other energy futures trading:
— Heating oil fell 1.3 cents to $3.067 per gallon.
— Wholesale gasoline fell 1.2 cents to $2.805 a gallon.
— Natural gas rose 1.1 cents to $3.474 per 1,000 cubic feet.