Oil falls as Fed maintains stimulus Register

Crude oil fell after the Federal Reserve said it would maintain its plan to buy $ 600 billion of Treasuries in June, the dollar strengthened.

Futures fell 0.4 percent as the Federal Open Market Committee said today that it will keep the program because the economic recovery is insufficient to reduce unemployment. An Energy Department report tomorrow may show that oil supplies fell last week.

"There were rumors that the Fed would increase the stimulus beyond the $ 600 billion," said Jason Schenker, president of Prestige Economics LLC, an energy consultancy in Austin, Texas. "The dollar has strengthened in some cases since the announcement."

Crude oil for January delivery fell 33 cents to settle at $ 88.28 a barrel on the New York Mercantile Exchange. Futures are up 27 percent from a year ago. Prices reached $ 90.76 a barrel on 7 December, the highest since October 2008.

Brent crude oil for January settlement rose 2 cents to end the session at $ 91.21 a barrel on London's ICE Futures exchange.

The U.S. currency rose 0.1 percent to $ 1.3383 per euro at 2:49 pm in New York. Earlier, the dollar fell to 0.8 percent at $ 1.3499, its lowest level since 23 November. A stronger dollar reduces the appeal of commodities as an alternative investment.

The Federal Reserve agreed to expand the purchase of bonds last month, a measure known as quantitative easing, to increase economic growth.

"We're getting good economic news, allowing the Fed to raise no quantitative easing, and potentially pull back in the future," said John Kilduff, a new partner of Capital LLC, a hedge fund in New York which focuses on energy.

U.S. optimism

Optimism among U.S. executives in the fourth quarter rose to its highest level since early 2006 as business leaders projected sales growth, investment and hiring, a private survey showed. economic forecast rate of up to 101 Business Roundtable, the Washington-based group said today. Readings above 50 signal expansion.

Gasoline inventories rose 2 million barrels in the week ended Dec. 10, according to the median of 17 responses from analysts polled by us. Supplies of crude oil probably fell 2.5 million barrels. Analysts were divided over whether distillate fuel stocks increased or decreased.

Gasoline for January delivery fell 2.2 cents, or 1 percent, to $ 2.2964 a gallon in New York, the lowest close since Nov. 30.

"The failure to hold above $ 90 last week hanging over the market," said Addison Armstrong, director of market research at Tradition Energy, a broker of Stamford, Connecticut. "Speculators At the same time we must try to make an offer is higher, and will not change until it runs out of money or go somewhere else."

Hedge Funds

Managed money, including hedge funds, pools of commodity trading advisors and commodity, increased net long positions by 42,603 futures and options combined to 206,807 the week ended December 7 The Commodity Futures Trading Commission said in its Commitments of Traders report from December 10.

"We will continue to play about $ 90 and perhaps the strike at $ 100 before year end," said Armstrong.

World oil demand has exceeded supply by more than 900,000 barrels per day on a seasonally adjusted basis since May, Goldman Sachs Group Inc. said in a report e-mailed yesterday. Goldman said it expects world oil market to remain in deficit in the first half of next year. The crude will average $ 100 a barrel in 2011 and $ 110 a barrel in 2012, according to estimates by Goldman.

Saudi Arabia, the largest oil exporting country, not immediately increase production when prices reach $ 100 a barrel, according to Banque Saudi Fransi.

"In order for Saudi Arabia to encourage other members of OPEC to do something, the prices remain at $ 100 for a long period and not just for a few weeks or a month," said John Sfakianakis, chief economist at the bank headquarters in Riyadh today by telephone. "This is not likely to happen soon."

OPEC Targets

The Organization of Petroleum Exporting Countries kept its production quotas unchanged at a meeting Dec. 11 in Quito, Ecuador. OPEC has maintained a target of 24.845 million barrels per day since December 2008, the longest period without change since it was first used in 1982.

volume of oil on the Nymex was 538,397 contracts as of 15:22 in electronic trading in New York. Volume was 692,514 contracts yesterday, close to the average of the last three months. Open interest was 1.38 million contracts.