LONDON: Oil prices fell on Thursday as traders reacted to news that the US Federal Reserve had decided against cutting its stimulus programme.
But while maintaining the $85 billion-a-month bond-buying scheme, the central bank gave a rosier-than-expected summary of the economy that fuelled rumours that it would start winding down soon.
This supported the greenback, making dollar-priced crude more expensive for holders of rival currencies, hurting demand and in turn putting downward pressure on prices, traders said.
New York's main contract West Texas Intermediate (WTI) for December delivery slipped 59 cents to $96.18 a barrel.
Brent North Sea crude for December dropped 21 cents to stand at $109.65 a barrel in London midday deals.
"The (Fed) statements reinforced the majority view that the Fed will be at a standstill" over stimulus, said Kelly Teoh, a strategist at traders IG.
Continued weak US demand for crude, highlighted by rising energy stockpiles, added to the downward pressure on prices.
"WTI fell due to a build up in inventory," said Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at Ernst & Young.
The US Department of Energy said in a report on Wednesday that oil stocks rose 4.1 million barrels last week, well above the Dow Jones Newswires's consensus estimate of 2.2 million barrels.
It was the sixth consecutive weekly increase in supplies in the world's largest economy.
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