Crude oil prices fell for the fifth time in six days on Tuesday, wilting amid high oil inventories and the Federal Reserve's continued concern about sluggish economic recovery. Crude futures extended losses right before the close of the oil's open outcry trading session in New York after the US Federal Reserve said it would keep interest rates exceptionally low and that the central bank was prepared to provide additional accommodation if needed to support recovery.
The October US crude contract expired on Tuesday, helping keep pressure on the front month and nearby months, industry sources said. US crude for October delivery fell $1.34, or 1.79 percent, to settle at $73.52 a barrel as it expired and went off the board. Trading ranged from $72.81 to $74.60.
US November crude fell $1.22, or 1.6 percent, to settle at $74.97 a barrel. ICE Brent for November fell 90 cents to settle at $78.42. The premium for November Brent over the equivalent US benchmark West Texas Intermediate contract rose to $3.45, based on settlement prices on Tuesday. The premium shrank below $2 when a leak closed the biggest Canada-to-US crude pipeline but widened when it became apparent flows would resume last week.
"There was pressure on the (US) October contract into its expiry as people realised that we have a glut of supply. That pressed the market down," said Phil Flynn, analyst at PFGBest Research in Chicago. "The November contract was more affected by the Fed statement today, which didn't inspire any confidence. The economy is still weak and that doesn't bode well for the energy market. The outlook isn't that great."
Oil futures failed to garner any support from a weak dollar, which can lift dollar-denominated crude oil prices because it makes the commodity less expensive in countries using currencies other than the greenback. The euro rallied more than 1 percent against the dollar on Tuesday, rising to a six-week high after the Federal Reserve statement.
Chinese figures offered some support for prices on Tuesday. China's apparent oil demand rose 8.2 percent in August over a year earlier, rebounding from July, Reuters calculations from official data showed. But US oil inventories remain high, with crude oil, distillate and gasoline stock levels all well above year-ago levels in the government's report for the week to September 10.
Crude inventories probably fell last week because of lower imports from Canada due to the Enbridge pipeline outage and as tankers navigated around stormy weather, according to an expanded Reuters survey of analysts on Tuesday. Industry group the American Petroleum Institute will publish US oil inventory data for the week to September 17 at 4:30 pm EDT (2030 GMT) on Tuesday. The US Energy Information Administration will release its data on Wednesday at 10:30 am EDT (1430 GMT).
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