ET: Crude stalls as investors watch Federal Reserve
Oil prices stalled for the second straight day on Tuesday as traders wait to see whether the Federal Reserve will keep interest rates at record lows that have helped push crude prices up.
Benchmark crude for May delivery fell $1.30 to $82.90 a barrel on the New York Mercantile Exchange. The contract lost 92 cents to settle at $84.20 on Monday.
When the Fed wraps up its two-day meeting Wednesday, it is all but certain to leave the key bank lending rate between zero and 0.25 percent, where it's been since December 2008.
The question is whether the Fed will talk about taking steps to reduce the unprecedented amount of money it pumped out to fight the Great Recession. The economy is getting better, but unemployment remains near double digits and is expected to stay high all this year.
Tougher talk from the Fed could mean higher interest rates eventually, which could slow economic growth, and crimp demand for oil with supplies already high, PFGBest analyst Phil Flynn said.
"The price of oil has been driven by Fed policy," he said. "When you remove the policy it should put downward pressure on the price."
Any Fed move also could drive the dollar higher and that too can affect oil prices. A stronger dollar makes crude more expensive for investors holding other currencies.
In other Nymex trading in May contracts, heating oil fell 0.34 cent to $2.2337 a gallon, and gasoline dropped 1.66 cents to $2.3243 a gallon. Natural gas slipped 1.3 cents to $4.275 per 1,000 cubic feet.
In London, Brent crude was down 84 cents at $85.97 on the ICE futures exchange.
