Oil dropped for a second day in New York on speculation stimulus measures in the US will strengthen its dollar, limiting the appeal of commodities to investors.
Futures extended yesterday's 0.4 per cent drop as the Federal Reserve said it would maintain its plan to buy $US600 billion of Treasuries by June because the economic recovery in the world's biggest oil consumer was insufficient. An Energy Department report today may show that oil supplies dropped last week, according to a Bloomberg News survey.
The January contract was down 0.2 per cent, or 18 cents, at $US88.10 a barrel in electronic trading on the New York Mercantile Exchange. Prices are 11 per cent higher this year.
The US currency rose against 13 of its 16 major peers and was 0.2 per cent higher versus the euro at $US1.3353. The Fed agreed to expand bond purchases last month, a move called quantitative easing, to increase economic growth.
Gasoline inventories increased 2 million barrels in the week ended December 10, according to the median of 17 analyst responses in a Bloomberg News survey. Crude-oil supplies probably dropped 2.5 million barrels. Analysts were split over whether stockpiles of distillate fuel rose or fell.
The industry-funded American Petroleum Institute yesterday reported that crude inventories fell 1.44 million barrels while gasoline supplies gained 2.42 million barrels.
The Energy Department is scheduled to release its inventory report in Washington later today.