New York's main contract, West Texas Intermediate (WTI) for delivery in August, was down six cents at USD 106.42 a barrel in mid-morning trade, while Brent North Sea crude for September shed 11 cents to USD 108.50. Bernanke told Congress yesterday the Fed had no firm timetable for cutting back on its bond purchases, and that it would consider reducing its stimulus programme only if the economy continues to improve.
"I emphasise that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course," he told the lawmakers. Desmond Chua, market analyst at CMC markets in Singapore, told AFP: "There is a dollar factor at play here. Bernanke's comments have strengthened the US dollar and that is easing demand for crude."
The greenback was changing hands at 99.77 yen in the morning, up from 99.60 yen in New York yesterday. A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand and pushing prices lower. Analysts however said oil prices will remain supported by signs of stronger demand in the United States, the world's top crude consumer, as well as fears of a disruption in Middle East supply caused by Egypt's political turmoil.
"High demand in the US and the continuing crisis in Egypt are likely to keep prices elevated in the near term," said Sanjeev Gupta, head of the Asia-Pacific Oil and Gas Practice at consultancy EY, formerly Ernst and Young. The official crude inventories report by the US Department of Energy Wednesday showed supplies in the US fell 6.9 million barrels in the week to July 12.