The price of oil fell again Tuesday, slipping toward $106 a barrel, as traders waited for the U.S. central bank to signal when it will start scaling back its monetary stimulus.
By early afternoon in Europe, benchmark oil for October delivery was down 78 cents to $106.32 a barrel in electronic trading on the New York Mercantile Exchange. The September contract fell 36 cents to settle at $107.10 on Monday.
Evidence that the U.S. economy is improving has led to speculation that the Fed will begin to reduce its $85 billion a month in asset purchases as early as September. The bond-buying program was initiated to help the U.S. economy recover from a tough recession following the 2008 financial crisis.
The Fed's stimulus policy has lowered interest rates and made oil and other commodities a more attractive investment by offering potentially higher returns. A "tapering" or phasing down of the program, expected as early as next month, could push oil prices down.
Global stock markets have been retreating in recent days as investors scurry to the sidelines to wait out the uncertainty. Traders were awaiting the release Wednesday of minutes from the Fed's July policy meeting for hints of whether and when the bank might begin cutting back on its bond-buying.
"As a result of the bearish mood, crude prices have slipped ... sparked by nervous investors taking profit," said a report from Sucden Financial Research in London. "Prices are still well supported at key levels owing to the unrest in Egypt and Libya."
Egypt, which controls the Suez Canal crucial to shipping in the Middle East, has been rocked by clashes between police and Islamist protesters after the ouster of President Mohammed Morsi. Libya's oil exports, meanwhile, have fallen sharply due to production outages and strikes at export terminals.
Later in the day, investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending Aug. 16 is expected to show draws of 1 million barrels in crude oil stocks and 1.5 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
Crude stockpiles have declined in seven of the past eight weeks.
Brent crude, which is used to price imported oil used by many U.S. refineries, was down 44 cents to $109.46 a barrel for October delivery on the ICE Futures exchange in London.
In other energy futures trading:
— Heating oil fell 0.41 cent to $3.0752 per gallon.
— Wholesale gasoline lost 1.3 cents to $2.8033 a gallon.
— Natural gas retreated 1.5 cents to $3.448 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.