Source: Associated Press, Pablo Gorondi and Alex Kennedy††(9/21/10)
"Oil prices dip Tuesday as traders awaited direction from the Fed."
Benchmark oil for October delivery lost $1.79 at $73.07 a barrel in morning trading on the New York Mercantile Exchange. Tuesday is the last day of trading in the October contract, so many traders moved to the November contract, where the price was down $0.97 at $75.22/barrel.
Federal Reserve policymakers are holding a one-day meeting, debating whether to take more steps to encourage economic growth and cut high unemployment. Few analysts expect the Fed to announce major new stimulus programs or changes in interest rates. Some investors think that the Fed's rate-setting committee could relaunch programs to buy Treasuries and mortgage bonds to stimulate the economy. An announcement was expected later Tuesday.
Oil prices have traded in a narrow range for weeksóbetween $70 and $80 a barrelówith supplies of crude, gasoline and diesel high with soft demand in the weak economy.
The Energy Department will release its latest inventory totals Wednesday. They are expected to show crude oil stocks down 1.5 million barrels and gasoline stocks unchanged for the week ending Sept. 17, according to analysts surveyed by Platts.
Although the Federal Reserve's actions are important, the oversupply is "really starting to weigh on people's minds," said Strategic Energy & Economic Research President Michael Lynch.
Stocks lost a little ground after Monday's rally. Oil traders watch the stock markets for hints about consumer sentiment. The DJIA lost about 17 points in morning trading, a day after closing at a four-month high. The NASDAQ and the S&P 500 fell slightly, too.
In London, Brent crude fell $0.56 to $78.80/barrel on the ICE Futures exchange.