Oil prices inch down on economic news

The Associated Press

Oil prices fell Oct. 14 as fresh economic reports added to speculation about what steps the Federal Reserve may take to bolster the U.S. economy.

Benchmark crude lost 17 cents at $82.84 a barrel in midday trading on the New York Mercantile Exchange. Trading was volatile with the November contract set to expire.

At the pump, prices continued to creep up, reaching a national average of $2.828 for a gallon of unleaded regular gasoline, according to a survey by AAA, Wright Express and the Oil Price Information Service. The price was 6 cents more than a week ago and 34.7 cents more than a year ago. Speculation among traders and investors is intensifying about what measures the Fed may take in November to boost the economy following two government reports that showed jobless claims rose last week for the first time in three weeks and wholesale prices edged up.

The increase in claims for unemployment benefits is a sign that employers are not adding workers. Unemployment is one of the key issues the Fed will consider when looking at ways to help the economy.

The Labor Department said the producer price index increased 0.4 percent in September. The index measures price changes before goods reach the consumer. Excluding volatile food and energy costs, core producer prices rose 0.1 percent from August.

Moderate price inflation allows the Federal Reserve to keep the short-term interest rate it controls at a record low of nearly zero. Low inflation also makes it more likely the Fed will launch another effort to lower longer-term rates by purchasing Treasury bonds.

Speculation about Fed moves has contributed to a weaker dollar against other currencies over the past month. Since commodities are priced in dollars, traders using other currencies can buy more product and that has boosted oil prices.

Meanwhile, the Energy Department said Oct. 14 that supplies of crude, gasoline and distillates — like diesel and heating oil — fell the week ending Oct. 8.

Commercial crude inventories dropped by 400,000 barrels to 360.5 million barrels, gasoline stockpiles fell 1.8 million barrels to 218.2 million barrels and distillates, which include heating fuel and diesel, shrank by 300,000 barrels to 172.2 million barrels. All three remained above the upper limit of the average range for this time of year.

The declining inventories across the board give traders “additional reason to believe that the highest inventories are behind us,” Cameron Hanover energy consulting agency said in a report.

Natural gas inventories held in underground storage in the lower 48 states grew by 91 billion cubic feet to 3.590 trillion cubic feet for the week ended Oct. 8. The total was 7.4 percent more than the five-year average, the Energy Information Administration said in its weekly report. Natural gas gained 5 cents to $3.746 per 1,000 cubic feet on the Nymex.

In other Nymex trading in November contracts, heating oil dipped 0.97 cent to $2.2910 a gallon and gasoline lost 2.54 cents at $2.1407 a gallon.

In London, Brent crude fell 49 cents to $84.15 a barrel on the ICE Futures exchange.

In other Nymex trading in November contracts, heating oil rose 0.34 cent to $2.3041 a gallon and gasoline gained 0.13 cent to $2.1674 a gallon. Natural gas fell 5.6 cents to $3.64 per 1,000 cubic feet.