WTI oil price dips under $80 after Fed announces QE lite

11 August 2010 11 August 2010

BonTrade

WTI oil prices are trading back under the $80 a barrel mark early on Wednesday after the US Fed announces it may choose to revive the “quantitative easing” scheme, dubbed “QE lite” by some commentators.

US Light crude oil futures for September 2010 delivery was trading at $79.94, 06.00 GMT on the NYMEX.

The US Fed commented that the pace of economic recovery is “likely to be more modest in the near term than had been anticipated” and that it would take more aggressive action to keep the recovery on track if needed.

The latest US Federal Reserve decision to pump in more money to prop up a softening US recovery is going to be bad news for holders of the US dollar, however the dollar has kept it’s balance in early trading this morning.

The US dollar was trading narrowly mixed in late morning Asian trade Wednesday, gaining against the euro in a risk off trade environment, but holding steady against the yen.

Oil prices have climbed above $80 a barrel several times in 2010 but have struggled to maintain that level for long amid doubts about the strength of the US economy and demand for crude oil.

“The crude oil price uptrend of the past month remains intact for now,” Ritterbusch and Associates said in a report.