Oil Falls Close to $2 during Afternoon Trading

While the price of crude oil saw moderate gains during the first part of the day to trade as high as $90.26 a barrel, the commodity proceeded to drop close to $2 during the afternoon session, eventually reaching the $88.36 level. Analysts attributed the downward movement to fears that the US Federal Reserve will not initiate a new round of quantitative easing to boost the US economic recovery. Today, oil prices may fall further depending on the results of the US Crude Oil Inventories figure and FOMC Statement. An increase in US crude oil stockpiles could signal to investors that demand has gone down, which may result in a drop in the price of oil. Furthermore, if the FOMC does decide to refrain from initiating a new round of quantitative easing, oil could see additional downward movement.

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