Oil Falls As Uncertainty Hits Energy Markets
By PABLO GORONDI
The price of oil fell Monday, hit by uncertainty about what the U.S. Federal Reserve might do with its bond purchase program and data showing the U.S. unemployment rate unchanged.
By early afternoon in Europe, benchmark crude for February delivery was down 44 cents to $92.65 per barrel in electronic trading on the New York Mercantile Exchange. On Friday, the Nymex contract closed up 17 cents at $93.09 a barrel after the U.S. Energy Department's Energy Information Administration reported that the nation's crude supplies fell by 11.1 million barrels during the last week of 2012, much more than analysts expected.
The impact of last week's release of a transcript of the Federal Reserve's December meeting showing that policymakers disagreed over how long to keep a bond-purchase program in place was still being felt on the market.Traders inferred the Fed might shorten the program, which could send U.S. interest rates, and therefore the dollar, higher. That in turn would hurt the price of oil. Oil, which is priced in dollars, tends to fall as the dollar strengthens and makes crude more expensive for investors holding foreign currencies. On Monday, the euro was down at $1.3030 from $1.3065 on Friday. Meanwhile, U.S. employers added 155,000 jobs in December, but the increase wasn't enough to reduce the unemployment rate, which remained 7.8 percent last month, the Labor Department said Friday. Analysts expect the Nymex contract, which finished 2012 around 7 percent lower on the year, its first annual fall since 2008, to continue trading near its current range in the near term. "The (2012) decline was brought on by ... comfortable supply, wobbly demand, and high inventories, all of which managed to reverse the occasional spikes we saw set in over the course of 2012," said Edward Meir of INTL FCStone in New York. "None of these variables are expected to dissipate anytime soon."
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