Oil falls to below $81 as traders look to Fed for possible stimulus
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SINGAPORE (AP) — Oil prices fell below $81 a barrel Tuesday in Asia as investors looked to a Federal Reserve meeting for possible policy changes to boost U.S. economic growth.
Benchmark crude for September delivery was down 56 cents at $80.92 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 78 cents to settle at $81.48 on Monday.
Oil jumped out of the $70s to a three-month high last week and has held above $80 despite a weak U.S. July employment report released Friday. Traders are speculating the Fed may announce later Tuesday new stimulus measures to keep the economy from slipping back into recession.
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"At this stage, we cannot imagine any set of numbers that this market will not interpret bullishly," Cameron Hanover said in a report. "Bullish numbers are bullish and bearish numbers will force the Fed to do something bullish."
Traders have shrugged off rising U.S. crude inventories as low interest rates encourage higher-risk investments. Based only on supply and demand, oil should be trading between $20 and $30, Cameron Hanover said.
"The best-heeled and biggest players can borrow money without any cost," Cameron Hanover said. "They have been borrowing that money and plowing it into commodities."
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In other Nymex trading in September contracts, heating oil fell 0.88 cent to $2.1450 a gallon, gasoline dropped 0.92 cent to $2.1095 a gallon and natural gas slid 1 cent to $4.299 per 1,000 cubic feet.
Brent crude was down 53 cents at $80.46 a barrel on the ICE futures exchange.