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Oil prices slip before US inventories

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(Globalpost/GlobalPost)

Global oil prices fell on Wednesday with traders expecting the US government to announce an increase in commercial crude stockpiles ahead of a decision on stimulus by the Federal Reserve.

New York's main contract, West Texas Intermediate (WTI) for delivery in March, dropped 53 cents to $96.88 a barrel.

Brent North Sea crude for March slipped 22 cents to stand at $107.19 a barrel in London midday deals.

US crude inventories were forecast to have risen by 2.2 million barrels in the week to January 24, according to a forecast of 11 analysts surveyed by Dow Jones Newswires.

The official stockpiles report will be released by the US Energy Department later on Wednesday.

A rise indicates weak demand in the world's biggest economy and oil consuming nation, putting downward pressure on prices.

Desmond Chua, market analyst at traders CMC Markets, said dealers were keenly looking also to see if the Fed further pares its monthly asset purchases when it concludes a two-day policy meeting on Wednesday.

He said the "most likely scenario" was that the Fed would go ahead with a further $10 billion reduction in monetary stimulus after shaving off $10 billion in January, leaving it still pumping out $75 billion-a-month to aid economic recovery.

Additional tapering of the Fed's asset purchases would likely boost the greenback, making dollar-priced oil more expensive for countries using other currencies, dampening demand.

Fed chairman Ben Bernanke steps down on Friday after an eight-year tenure, and will be succeeded by current vice-chairman Janet Yellen.

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http://www.globalpost.com/dispatch/news/afp/140129/oil-prices-slip-us-inventories