U.S. crude oil futures pared gains to close lower Thursday, after Federal Reserve Chairman Ben Bernanke stated that the Fed would intervene if financial conditions worsen, although without any clarity in the issue. Oil prices had rallied earlier after China announced an unexpected cut in lending rates to stimulate growth.
Light Sweet Crude Oil futures for July delivery, dropped $0.20 or 0.2 percent to close at $84.82 a barrel on the New York Mercantile Exchange Thursday.
Crude prices scaled a high of $87.03 a barrel intraday and a low of $84.51.
Oil prices ended higher yesterday on a weak dollar and increased optimism on a solution to the eurozone crisis. The gains were, however, capped after an Energy Information Administration report showed oil stockpiles in the U.S. dropped less than expected.
The Federal Reserve Chairman Ben Bernanke's remarks came before the Joint Economic Committee of Congress and did indicate that the Fed would act if the eurozone crisis worsens. Nonetheless, Bernanke did not provide any explicit reference to further easing measures despite the ongoing crisis in Europe and recent weakness in the labor market.
Earlier today, China's central bank unexpectedly cut its benchmark interest rates by 25 basis points. Economists say Beijing's move is a clear sign that central banks are becoming alarmed about the health of the global economy.
This morning, the U.S. dollar traded at a two-year high versus the euro and around a five-month high against the sterling.
The dollar index, which tracks the U.S. unit against six major currencies, was trading at 82.262 on Thursday, down from 82.264 in North American trade late Wednesday. The dollar scaled a high of 82.39 intraday and a low of 81.91.
The euro traded lower against the dollar at $1.2554 on Thursday, as compared to $1.2561 late Wednesday. The euro scaled a high of $1.2625 intraday and a low of 1.2542.
In economic news from the U.S., the Labor Department said new claims for unemployment benefits fell more than expected for the week ended June 2. The the level of initial jobless claims were at 377,000 for the week, on a seasonally adjusted basis, a drop of 12,000 from the previous week's revised level of 389,000.
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