Crude futures fell 0.81% to $104.45 a barrel by mid-afternoon in New York, following comments yesterday from Charles Evans, President of the Chicago Fed, in which he refused to rule out September as a potential time for the Fed to begin tapering.
Worries that the Fed may soon curb its stimulus have begun to mount again in the last few days, and the resultant ‘risk-off sentiment’ is stalling the stock market and commodity prices alike.
The drop in the price of oil comes in spite of data from the US Energy Department showing that US stockpile of crude waned last week, the fifth fall reported in the last six weeks.
The Energy Information Administration, the statistical branch of the Energy Department, said that crude oil inventories declined by 1.32 million barrels last week to 363.3 million. This was broadly in line with expectations though, and so had little impact on today’s prices.
Production of crude oil continues to rise, with output up 0.2% last week to 7.56 million barrels per day, the highest level in 23 years. US crude production has soared since last year, with previously untapped shale supplies now obtainable thanks to progress in techniques such as fracking and horizontal drilling.