Oil slips to near $74 in Asia as traders look to Fed meeting for guidance on rates, growth

Oil slips to near $74 ahead of key Fed meeting

Oil prices slipped to near $74 a barrel Tuesday as traders looked to a key U.S. central bank meeting later in the day for possible new policies to help boost economic growth.

By early afternoon in Europe, benchmark crude for October delivery was down 68 cents to $74.18 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.20 to settle at $74.86 on Monday.

The Federal Reserve Board meets Tuesday and investors are watching closely for clues about the central bank’s monetary policy. Some investors are speculating that the Fed’s rate-setting committee could relaunch programs to buy Treasurys and mortgage bonds in an effort to stimulate the economy.

“Concerns about oil demand weakening should continue to weigh on prices,” said a report from Commerzbank in Frankfurt. “These worries should be strengthened again after today’s Fed meeting on account of a modest outlook on the economy from the U.S. central bank.”

Oil prices have bobbed around the $75 a barrel level since the beginning of summer. Some analysts expect high crude inventories to weigh on prices even if the economy grows more than expected over the next year.

“An unusually bearish fundamental oil landscape will make it more difficult for petroleum to share in additional sprees of economic optimism,” Ritterbusch and Associates said in a report. “We view this market as moving in waves that have left futures little changed from price levels that existed some four months ago.”

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department’s Energy Information Administration — the market benchmark — will be out on Wednesday.

Data for the week ending Sept. 17 is expected to show a draw of 1.5 million barrels in crude oil stocks, while gasoline stocks are expected to remain unchanged according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

In other Nymex trading in October contracts, heating oil fell 0.15 cent to $2.1379 a gallon and gasoline added 0.05 cent to $1.9501 a gallon. Natural gas gained 2.1 cents to $3.843 per 1,000 cubic feet.

In London, Brent crude fell 8 cents to $79.24 a barrel on the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.