The price of oil fell again today, slipping toward $106 a barrel, as traders waited for the US Federal Reserve to signal when it will start scaling back its monetary stimulus.
Benchmark oil for October delivery was down 78 cents to $106.32 a barrel in electronic trading on the New York Mercantile Exchange. The September contract fell 36 cents to settle at $107.10 last night.
Brent crude was down 44 cents to $109.46 a barrel for October delivery on the ICE Futures exchange in London.
Evidence that the US economy is improving has led to speculation that the Fed will begin to reduce its $85 billion a month in asset purchases as early as September.
The bond-buying programme was initiated to help the US economy recover from a tough recession following the 2008 financial crisis.
The Fed's stimulus policy has lowered interest rates and made oil and other commodities a more attractive investment by offering potentially higher returns.
A "tapering" or phasing down of the programme, expected as early as next month, could push oil prices down. Global stock markets have been retreating in recent days as investors scurry to the sidelines to wait out the uncertainty.
Traders are waiting for the release tomorrow night of minutes from the Fed's July policy meeting for hints of whether and when the bank might begin cutting back on its bond-buying.
Meanwhile, analysts said that prices are still well supported at key levels owing to the unrest in Egypt and Libya.
Egypt, which controls the Suez Canal crucial to shipping in the Middle East, has been rocked by clashes between police and Islamist protesters after the ouster of President Mohammed Morsi. Libya's oil exports, meanwhile, have fallen sharply due to production outages and strikes at export terminals.
Later in the day, investors will also be monitoring fresh information on US stockpiles of crude and refined products.
Data for the week ending August 16 is expected to show draws of 1 million barrels in crude oil stocks and 1.5 million barrels in petrol stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later today, while the report from the Energy Department's Energy Information Administration - the market benchmark - will be out tomorrow. Crude stockpiles have declined in seven of the past eight weeks.
