Price of oil edges downward from $96 per barrel

AP News
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Posted: Jun 11, 2013 5:40 AM
Price of oil edges downward from $96 per barrel

BANGKOK (AP) — Oil prices edged down Tuesday after a credit-rating upgrade of U.S. government debt led investors to speculate that the U.S. central bank might consider scaling back its aggressive monetary policies.

Benchmark oil for July delivery fell 26 cents to $95.51 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 26 cents to close at $95.77 per barrel on the Nymex on Monday.

Investors have been trying to guess the timetable for the U.S. Federal Reserve to wind down its massive bond-buying program. The $85 billion-a-month asset purchases, which help put pressure on interest rates, have been a boon to stock and commodities markets, where investors have turned in search of returns that outdo bonds.

Stan Shamu, a market strategist at IG in Melbourne, said the chances that the Fed might taper off purchases might be viewed as increasing after Standard & Poor's Ratings Services upgraded its outlook Monday for the U.S. government's long-term debt. That could hurt stock and oil prices.

"This restored the notion that the Fed will be looking to taper off soon enough as conditions seem better," said Shamu in an email commentary.

Traders were also waiting for updated forecasts on global oil demand. OPEC and the U.S. Energy Department issue their monthly reports Tuesday, while the International Energy Agency, an umbrella group for the world's oil consuming nations, gives its update Wednesday. The U.S. Energy Department also comes out with its weekly report on oil and fuel supplies.

Brent crude, a benchmark for many international oil varieties, fell 35 cents to $103.56 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

— Wholesale gasoline fell 1.3 cents at $2.8348 a gallon.

— Heating oil fell 0.1 cent at $2.8773 per gallon.

— Natural gas rose 0.2 cent to $3.802 per 1,000 cubic feet.