Commodity Corner: Fed Statement Lowers Oil Prices
September crude oil futures fell again Tuesday as the Federal Reserve made another attempt to stimulate a listless economy.
Oil fell $1.23, settling at $80.25 a barrel, after the Fed announced a decision to leave the federal funds rate of zero to 1/4% unchanged for an extended period. Low interest rates draw money to commodities, and the central bank is hopeful that they will reverse softening consumer spending and manufacturing. The Fed will reinvest proceeds from maturing mortgage bonds into longer-term government debt, a strategy intended to keep borrowing costs low.
Globally, a report showed a 17.5% drop in China's import growth for July placed a further drag on oil prices Tuesday. Traders often look to China as an indicator of global economic recovery.
Oil prices fluctuated from $79.20 to $81.62 a barrel during Tuesday's session.
Meanwhile, natural gas settled at its lowest price in 10 weeks: $4.30 per thousand cubic feet. Analysts speculate that with fewer tropical storm threats and lower temperatures ahead of us, coupled with abundant supplies, natural gas is quickly losing the weather-driven pace it enjoyed the last couple of months. Natural gas traded from $4.28 to $4.37.
Gasoline prices fell three cents to settle at $2.09 per gallon. The intraday range for gasoline was $2.07 to $2.12 on Tuesday.