Oil prices fall below $96, reversing gains

[August 24, 2012]  LONDON (AP) -- The price of crude fell below $96 as oil markets grew pessimistic over the likelihood of more economic stimulus for the U.S. economy.

Benchmark crude fell 43 cents to $95.84 per barrel in midday trading in London in electronic trading on the New York Mercantile Exchange. The contract fell 99 cents to finish at $96.27 per barrel in New York on Thursday. Brent crude fell 22 cents to $114.79 on the ICE Futures exchange in London.

The decline erased nearly all the gains made after minutes released Wednesday from the U.S. Federal Reserve's latest policy meeting suggested the Fed was preparing new steps to boost the economy. But on Thursday, oil traders began to reassess their outlook. There was also more uncertainty out of Europe.

James Bullard, president of the Fed's St. Louis bank, told CNBC on Thursday that the minutes from the Fed's meeting were "stale" because the economy had picked up since then. The oil market had hoped for another round of bond-buying, called "quantitative easing."

Stan Shamu of IG Markets in Melbourne suggested in a market commentary that the Fed was "unlikely to announce further easing" at its meeting next month based on Bullard's assessment that the minutes were outdated.

The leaders of Germany and France also suggested Thursday that they would be hesitant to extend deadlines for Greece to make reforms tied to its emergency bailout.

In other futures trading on the Nymex, gasoline futures rose 0.4 cents to $2.9531. Heating oil was steady at $3.14 per gallon. Natural gas rose 4 cents to $2.84 per 1,000 cubic feet.

[Associated Press]

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