Oil Falls, Giving Up Rebound That Followed Interest Rate Cuts

Crude oil fell, giving up a rebound that followed coordinated interest rate cuts by central banks in the U.S., Europe and China intended to thaw credit markets.

The Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point to shore up confidence and global growth. Prices gained as much as 93 cents immediately after the rate reductions were announced.

Crude oil for November delivery traded at $88.24 a barrel, $1.82 lower, on the New York Mercantile Exchange at 8:57 a.m. in New York. Before the rates cuts, crude fell as much as 4.5 percent, to $86.05, the lowest since Dec. 6, 2007.

The U.S. Energy Department will probably say that U.S. fuel supplies rose last week, according to Bloomberg survey before the department's weekly report, scheduled for release at 10:35 a.m. in Washington.

Gasoline inventories probably gained 1.5 million barrels in the week ended Oct. 3 from 179.6 million barrels the week before. Consumption of the motor fuel dropped 9.5 percent from a year earlier to 8.625 million barrels a day last week, according to MasterCard Inc.

Gold advanced for a third day in London as plunging equity markets spurred investors to seek a haven. Platinum fell on concern that slower economic growth will sap demand for cars, which use the metal in autocatalysts.

Gold for immediate delivery rose as much as $29.05, or 3.3 percent, to $916.15 an ounce, exceeding $900 for the first time this month. The metal pared gains, trading up 1.2 percent at $897.72 as of 12:10 p.m., after central banks including the Federal Reserve, European Central Bank and Bank of England lowered interest rates in an unprecedented bid to ease the effects of the financial crisis.

TradingEconomics.com, Bloomberg
10/8/2008 6:20:26 AM