Oil Falls On Growth Worries And Possible Higher Crude Inventories

Although the continued tensions in the Middle East still provide additional support to the oil market, crude fell on Tuesday as the outlook for global growth remains weak, the markets are well supplied while the U.S. oil inventories are likely to advance.

Crude oil dropped today trading as of this writing at $88.75 a barrel, with the lowest found at $88.73 and highest at $89.26, especially as the dollar index recovered some of its losses as sales of new homes in the U.S. probably rose in September to the highest since 2010.

Violence linked to the conflict in Syria is intensifying, which increased worries of a possible supply disruption from the region if Syria's civil war spreads further across the region, including major oil producers like Iraq.

Yet crude fell today ahead of a report on Wednesday that may show U.S. oil inventories rose for the third straight week as crude output climbed to the highest in more than 17 years, while caution is building ahead of tomorrow’s FOMC meeting in Washington D.C.

Crude may witness some correction throughout the day if prices fall towards the technical support at $88.00 a barrel and if investors become more confident on speculation Bank of Japan and China’s central bank will add further stimulus to support their economies.

Investors should be closely following the tropical storm Sandy, the 18th named storm of the Atlantic hurricane season, which is forecasted to become a hurricane tomorrow and hit East Florida. So far 2012 is the fourth-most active year for hurricanes on record.

Brent however rose as of this writing 0.03% to $109.47 after TransCanada Corp., which announced yesterday plans to restart its Keystone pipeline which runs from Alberta to Illinois, said it won’t resume full deliveries until next month.