Oil Drops After Fed Committed to Tapering

West Texas Intermediate crude decreased for the first time in six days after U.S. Federal Reserve Chairman Janet Yellen reiterated the outlook for cutting back stimulus.

Futures fell as much as 0.5 percent. Yellen delivered her first public remarks as Fed chairman as policy makers pursue plans to gradually scale back the bond-purchase program to bolster economic growth. She repeated the projection of further reductions in asset purchases and said they are not on a “pre-set course.” A U.S. government report tomorrow will probably show that crude supplies rose for a fourth week.

“Yellen made it clear that she intends to continue tapering,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “There were hopes that she might be more dovish and was leaning toward more stimulus, but she quashed them.”

WTI for March delivery dropped 28 cents, or 0.3 percent, to $99.78 a barrel at 9:39 a.m. on the New York Mercantile Exchange. Futures touched $100.55 yesterday, the highest intraday price since Dec. 27. The volume of all futures traded was 3.2 percent above the 100-day average.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza