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Oil Hits 18-Month Low As Stockpiles Rise

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World oil prices tumbled more than 3 percent on Wednesday to their lowest in a year and a half, as data showed U.S. crude inventories unexpectedly swelled and investors were disappointed at measures the Federal Reserve announced to aid the economy.Oil, equities and other risky assets vacillated after the Fed statement, first falling on the absence of more aggressive easing measures, then rallying on hope that an extension of Operation Twist — an effort to depress borrowing costs by selling short-term bonds to buy longer-dated ones — might help.

 

Within an hour, most financial markets were back to pre-Fed levels, and oil traders focused on signs that the euro zone debt crisis and lackluster growth in the U.S. economy are exacerbating a growing surplus of stockpiled oil. But near the close, crude futures on both sides of the Atlantic lost further ground as investors digested comments by Fed Chairman Ben Bernanke that offered little hope for further quantitative easing that could spark investment in riskier assets such as commodities. Previous rounds of stimulus have sent investors into those assets, supporting oil prices.

 

Source: Reuters