Commodity Corner: Fed Report Dampens Oil's Rally

October crude oil surged well past $75 a barrel Wednesday, buoyed in part by a strengthening euro. Then the Federal Reserve Board released the latest installment of its informal assessment of the economy known as the "Beige Book."

By the time the Fed issued its collection of observations at 2 p.m. EDT, oil had surged from $73.37 to $75.39. It ultimately fell to a settlement price of $74.67. Just what did the Fed say to deflate Wednesday's oil rally? Although the central bank observed signs of continued growth in the U.S. economy during the reporting period of mid-July through mid-August, it also acknowledged "widespread signs of a deceleration compared with preceding periods." Moreover, the Fed detected an apparent "increase on balance" in the area of consumer spending but added that the consumers are limiting their nonessential purchases. Growth in manufacturing activity appears to be slowing, and home sales continued to trend downward, according to the central bank.

Despite the dampening effect of the Fed's report, Wednesday's settlement price represents a 58-cent gain from the previous day's price.

Thanks to a mild weather forecast, coupled with no near-term threat of a tropical system entering the Gulf of Mexico, natural gas for October delivery inched four cents downward Wednesday. Before settling at $3.81 per thousand cubic feet, gas traded within a range from $3.79 to $3.91. A new tropical storm, Igor, did form near the Canary Islands Wednesday and was moving westward at 6 miles per hour late that afternoon. The National Weather Service expects Igor to reach hurricane strength by early Saturday afternoon.

The price of a gallon of gasoline edged a penny upward to end the day at $1.94. October gasoline futures fluctuated from $1.91 to $1.96.