Oil fell 2.5 percent after Fed Chairman Ben S. Bernanke and his colleagues pledged to keep the benchmark interest rate at a record low through mid-2013 and said they are “prepared to employ” additional tools “as appropriate.” Economists including Kenneth Rogoff, a Harvard University economics professor and former Fed researcher, had said the Fed was likely to start a third round of asset purchases, nicknamed QE3.
“They didn’t do something that would have a tangible and immediate impact,” said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. “Without QE3 to sort of give a sentiment and capital boost to the markets, the negative economic news is going to be a bigger drag that could weigh on crude.”
Crude for September delivery dropped $2.01 to $79.30 on the New York Mercantile Exchange, the lowest settlement since Sept. 29. Futures have fallen 17 percent in August and 13 percent this year.
Brent oil for September settlement fell $2.35, or 2.3 percent, to $101.39 a barrel at 2:44 p.m. in New York on the ICE Futures Europe exchange in London. Earlier, it tumbled $5, or 4.8 percent, to $98.74 to fall below $100 for the first time since Feb. 8.