High-yield/macroeconomics (fka YIELD)

[Preciouslife1]

AP/Oil Prices Fall After Overnight Fed Cut
Wednesday January 23, 7:00 am ET
Oil Prices Drop After Surprise Overnight Fed Cut to Halt US Slide Toward Recession

http://biz.yahoo.com/ap/080123/oil_prices.html

BANGKOK, Thailand (AP) -- Oil futures fell Wednesday in Asia, extending overnight declines despite the U.S. Federal Reserve's surprise interest-rate cut.
Many investors doubted the Fed's emergency measures will stave off a serious slowdown that would dampen demand.

Light, sweet crude for March delivery lost 60 cents to $88.61 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. It fell 71 cents to settle at $89.21 a barrel in the floor session overnight.

The contract for February delivery fell 72 cents in the floor session to settle at $89.85 a barrel. It expired at the close of trade.

The Fed slashed its federal funds rate -- the interest that banks charge each other on overnight loans -- by three-quarters of a percentage point Tuesday to 3.5 percent. It was the biggest single cut in records that go back to 1990.

The U.S. central bank was responding to concerns about a possible recession that have sent global equities markets sharply lower in recent days. Asian stock markets rebounded Wednesday, although the Dow Jones industrials still lost 1.1 percent after the cut.

The benchmark Nikkei 225 index rose 2 percent, while Hong Kong's Hang Seng Index was up nearly 11 percent in late afternoon trade. Both indices -- along with other Asian indexes -- have lost heavily since the beginning of the year on U.S. recession fears.

The Dow industrials might have fallen further Tuesday had the Fed not acted. Oil futures recovered from earlier losses during the day because the Fed move appeared to stabilize stocks, analysts said.

"I think the oil market is now attached to the hip of the equity markets," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Energy investors often view stocks as a proxy for economic growth, and slower economic growth could cut demand for oil and petroleum products such as gasoline and heating oil.

High energy prices also have been cited as a force pushing the economy toward recession. If oil prices continue to fall, as many analysts now expect, that could relieve some of the pressure on the global economy.

March Brent crude fell 27 cents to $88.18 a barrel on the ICE Futures exchange in London.

Nymex heating oil futures rose 1.01 cents to $2.4625 a gallon (3.8 liters) while gasoline prices dropped 0.81 cent to $2.2725 a gallon. November natural gas futures rose 4 cents to $7.71 per 1,000 cubic feet.