Commodity Corner: Oil Falls on Fed, Inventory Worries
Crude futures for October delivery ended lower on news of a sluggish economic recovery, echoed at Tuesday's Federal Reserve meeting.
Although Fed policymakers are prepared to prevent unemployment rates from increasing and prices from declining, no specific stimulus programs were reported at the Federal Reserve's Federal Open Market Committee meeting today. Analysts predict that the future of oil demand was affected by the Fed statement—opposed to today's prices—as it didn't inspire any confidence for November delivery.
The market was also under pressure as Tuesday marked the last day for the crude October contract expiration. Analysts assume the pressured market is a result of record surpluses in oil and gas inventories. Additionally, oil futures received no support from a weakening dollar, as the euro rallied more than 1 percent against the dollar Tuesday.
Light, sweet crude fell $1.34 to $73.52 a barrel on the New York Mercantile Exchange Tuesday after peaking at $74.60 and bottoming out at $72.81.
Meanwhile, natural gas fell after the Federal Reserves statement released Tuesday, but held its gains. Henry Hub natural gas increased 10 cents, settling at $3.92 per thousand cubic feet. The intraday range was $3.81 to $4.00.
Gasoline lost 3 cents, settling at $1.92, after fluctuating between $1.92 and $1.97 Tuesday.