Oil inches below $83 as traders mull Fed moves

October 19, 2010 11:27 am | Updated 11:27 am IST - SINGAPORE

An oil pump works in front of a natural gas burn-off in Bahrain. File photo

An oil pump works in front of a natural gas burn-off in Bahrain. File photo

Oil prices inched below $83 a barrel Tuesday in Asia as investors mull the impact possible Fed measures to boost the U.S. economy would have on crude.

Benchmark oil for November delivery was down 34 cents to $82.74 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.83 to settle at $83.08 on Monday.

Crude prices were bolstered Monday by rising U.S. equities while Asian stock markets were mixed Tuesday.

Investors expect the Federal Reserve will soon initiate a program to buy more bonds - known as quantitative easing - which would drive interest rates down.

Some analysts expect greater monetary liquidity will spur lending but also push commodity prices higher, which would temper any jump in consumer demand.

“On the one hand, additional easing may reignite GDP through increased U.S. exports and domestic consumption,” Bank of America Merrill Lynch said in a report. “But on the other, higher oil prices will act as a tax on American consumers, partly taking away the benefit of lower refinancing costs and rising asset values.”

In other Nymex trading in November contracts, heating oil fell 1.22 cents to $2.264 a gallon and gasoline dropped 0.65 cent to $2.145 a gallon. Natural gas slid 1.7 cents to $3.414 per 1,000 cubic feet.

In London, Brent crude fell 50 cents to $83.87 a barrel on the ICE Futures exchange.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.