Oil swoons in late sell-off; taper fears catch up to market

Reuters with
Oil rigs just south of town extract crude in Taft, California.
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U.S. oil futures fell more than $2 a barrel on Tuesday amid speculation the U.S. Federal Reserve may ease up on its monetary stimulus program, a move that could tighten money and lessen the appetite for risky asset.

Global equity markets and government debt also dipped as traders parsed comments from Minneapolis Fed President Narayana Kocherlakota and Atlanta Fed President Dennis Lockhart for clues on the Fed's stimulus, which has supported commodity prices.

West Texas Intermediate was also pressured by an anticipated build-up in U.S. crude stockpiles, which widened the spread between the two benchmarks by over $1 to around $12.69 a barrel.

Brent crude for December delivery fell 80 cents to under $106 a barrel. U.S. crude settled down $2.10 at $93.04 per barrel, its lowest settlement since May 31

Brent oil found some support from disruptions to Libyan oil exports and a lack of agreement between Western nations and Iran over its nuclear program. Strikes and protests across the country have slashed Libya's oil exports to below 10 percent of its 1.25 million barrels per day (bpd) capacity, boosting oil prices.

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