New York: Brent crude plunged to 17-month lows on Wednesday as U.S. inventories swelled and traders weighed the Federal Reserve's vote to extend a program to stimulate the economy.
Ongoing concerns about the euro zone crisis and the impact on oil demand hit prices early. They fell further after U.S. inventory data showed an unexpected build in crude stockpiles. Weak demand and rising supplies have built up the supply cushion in the world's biggest crude market to levels not seen since 1990.
The market briefly extended losses after the Fed said it would extend Operation Twist, an effort to depress borrowing costs by selling short-term bonds to buy longer-dated ones, without offering clues on any further easing measures.
"Some market participants were expecting QE3 (a third round of quantitative easing), and will be disappointed yet again," said Jason Schenker at Prestige Economics in Austin, Texas.
"The stimulus announced today is very modest."
Brent crude for August delivery traded down $2.08 to $93.68 a barrel by 1:18 a.m. EDT (1718 GMT), retracing some losses after touching a session low of $92.65 after the Fed announcement, the lowest level since January 2011.
The U.S. July crude contract, which will expire expiring at the close, fell $1.82 to $82.21 a barrel. The more actively traded August crude gave up $1.87 to trade at $82.48 a barrel.
Copyright @Thomson Reuters 2012
Ongoing concerns about the euro zone crisis and the impact on oil demand hit prices early. They fell further after U.S. inventory data showed an unexpected build in crude stockpiles. Weak demand and rising supplies have built up the supply cushion in the world's biggest crude market to levels not seen since 1990.
The market briefly extended losses after the Fed said it would extend Operation Twist, an effort to depress borrowing costs by selling short-term bonds to buy longer-dated ones, without offering clues on any further easing measures.
"Some market participants were expecting QE3 (a third round of quantitative easing), and will be disappointed yet again," said Jason Schenker at Prestige Economics in Austin, Texas.
"The stimulus announced today is very modest."
Brent crude for August delivery traded down $2.08 to $93.68 a barrel by 1:18 a.m. EDT (1718 GMT), retracing some losses after touching a session low of $92.65 after the Fed announcement, the lowest level since January 2011.
The U.S. July crude contract, which will expire expiring at the close, fell $1.82 to $82.21 a barrel. The more actively traded August crude gave up $1.87 to trade at $82.48 a barrel.
Copyright @Thomson Reuters 2012
