NEW YORK (AP) — The price of oil fell near $93 a barrel Wednesday on concerns that the Federal Reserve may ease up on its stimulus measures and that the stock market rally is cooling.
By afternoon in New York, benchmark oil for July delivery was down $1.69 to $93.31 a barrel. It fell as low as $93.10.
Improvement in the U.S. economy, particularly the housing sector, has set off speculation that the Fed will pull back on stimulus measures. The Fed has been buying $85 billion of bonds each month in an effort to keep interest rates low and encourage borrowing, lending and investing. That environment has helped make oil a more attractive investment than low-yielding options such as bonds.
Oil has also ridden the coattails of the record-setting U.S. stock market. On Wednesday, analysts questioned if investors might be anticipating a pullback in stocks, as the Standard & Poor's 500 index and the Dow Jones industrial average gave back the gains they recorded Tuesday.
Also overhanging the oil market is the reality of supply and demand. Supplies are ample while demand is modest, keeping energy prices in check, traders said.
"We all know that the US supply is near record highs and demand is playing catch up as slow as the economy is recovering," said Carl Larry of Oil Outlooks and Opinions. "So now we're stuck with moderate demand, consistent and steady supply and no real worry about where the next barrel of oil is coming from."
The latest information about U.S. stockpiles of crude and refined products is on the horizon.
Data for the week ending May 24 is expected to show declines of 1.5 million barrels in crude oil stocks and of 800,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Wednesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Thursday. Both reports come a day later than usual because of Monday's Memorial Day holiday.
Brent crude, a benchmark for many international oil varieties, was down $1.33 to $102.90 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline dropped 5 cents to $2.80 a gallon.
— Heating oil fell 3 cents to $2.88 per gallon.
— Natural gas shed 6 cents to $4.16 per 1,000 cubic feet.
Pablo Gorondi in Budapest and Pamela Sampson in Bangkok contributed to this report.