Oil prices Wednesday retreated for a third straight day as global markets fixated on the timing for the Federal Reserve to scale back its stimulus program.
US benchmark West Texas Intermediate for October delivery dropped $1.26 to $103.85 per barrel on the New York Mercantile Exchange.
European benchmark Brent oil futures for October delivery fell 34 cents to $109.81 per barrel.
The Fed Wednesday released minutes from its last monetary policy meeting. The oil market has been closely following the Fed’s debate on when to scale back its $85 a month bond buying program.
One concern is that the shift will hit oil demand in key emerging economies like India, where the rupee has fallen sharply against the dollar in recent weeks.
More generally, a strong dollar undermines oil prices because crude is traded in dollars and becomes more costly in non-dollar economies when the dollar rises.
Wednesday’s minutes of the July 30-31 meeting of the Federal Open Market Committee (FOMC) showed central bankers sharply divided on when to scale back the program in light of contrasting views of the strength of the US economic recovery.
“The Fed minutes were sort of in line with expectations,” said Andy Lebow, vice president at Jefferies Bache in New York.
Analysts said the weekly US oil inventory report did not significantly affect the market. The report said US oil inventories dropped 1.4 million barrels compared with the 1.3 million expected in a Dow Jones Newswires survey.
Wednesday’s decline in prices came despite some fresh signs of supply outages. Libya’s National Oil Company declared force majeure at its main export terminals following labor disputes, while an oil pipeline in Iraq was damaged due to coordinated attacks amid sectarian conflict.
The international disruptions “ultimately may lead support to the overall crude market,” Lebow said.