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Oil fell after the Energy Department said U.S. crude stockpiles rose to the highest level in almost 22 years and as investors awaited a Federal Reserve announcement on whether it will act to bolster the economy.
Futures dropped as much as 2 percent after the report showed supplies rose 2.86 million barrels to 387.3 million last week, the highest level since July 1990. Supplies were forecast to decline, according to analysts surveyed by Bloomberg. The Fed may announce more stimulus measures at the end of a two-day meeting this afternoon in Washington.
The Fed will probably decide today to expand Operation Twist beyond $400 billion to spur growth and buy protection against a deeper crisis in Europe, according to a Bloomberg News survey of economists. Fifty-eight percent of respondents in a June 18 poll said the Fed will prolong the program, which seeks to lower borrowing costs by extending the average maturity of the securities in the central bank’s portfolio.
Crude oil for July delivery fell to $81.76 a barrel on the New York Mercantile Exchange. Oil traded at $83.02 before release of the inventory report.
Brent oil for August settlement declined $1.26, or 1.3 percent, to $94.50 a barrel on the London-based ICE Futures Europe exchange. Futures ended yesterday’s session at $95.76, the lowest settlement since January 2011.
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