Oil drops after Fed douses stimulus hopes
World oil prices slid on Wednesday after the Federal Reservepoured cold water on hopes of more monetary stimulus, while traders awaited the latest snapshot of US crude inventories.
New York’s main contract, West Texas Intermediate crude for delivery in May, dropped 66 cents to $103.35 a barrel.
Brent North Sea crude for May lost 24 cents to $124.62 a barrel in London morning trade.
Minutes from the Fed’s March 13 policy meeting published on Tuesday eased the likelihood of a third round of quantitative easing (QE) to boost growth in the United States, which is the world’s biggest economy and largest oil consumer.
“Some market participants were disappointed when the minutes of the last Fed meeting did not mention QE3,” said Petromatrix oil analyst Olivier Jakob.
“The dollar … had a strong surge while the S&P500 and oil suffered a set-back after the release of the Fed minutes.”
The stronger greenback makes dollar-priced crude more expensive for buyers using weaker currencies, denting demand for oil.
Later on Wednesday, the US government’s Department of Energy will publish its weekly report onAmerican oil reserves for the week ending March 30.
Further ahead, market participants were eagerly awaiting Friday’s US jobless data.
Elsewhere, tensions between the West and major crude producer Iran remain a key concern for investors.
Crucial nuclear talks due to take place next week between Iran and world powers have run into disagreement over the host city, with Tehran on Wednesday saying it no longer wants Istanbul as the venue.
Instead, according to Iraq’s foreign ministry, Iran has formally requested Baghdad hold the April 13-14 negotiations.
The new round of negotiations is seen as an important opportunity to lower tensions over Iran’s nuclear programme that have been coloured by threats from Israel and the United States of military action.
Washington and its allies believe Iran’s nuclear activities include a drive towards atomic weapons capability and have imposed a raft of sanctions to punish Tehran.
Iran denies there is any military component to its programme and says it will not bow to sanctions pressure.
The last round of talks between Tehran and the so-called P5+1 group, which comprises the five permanent UN Security Council members plus Germany, was held in Istanbul in January 2011 and ended in failure.