U.S. crude oil declined from a new record above $109 on Tuesday after the Federal Reserve announced measures to inject liquidity into the financial system.
In a measure to alleviate worries of an economic recession in the U.S. the Fed said today, it plans to lend up to $200 billion of Treasury securities.
After the announcement the dollar gained significantly against the euro climbing to $1.5336.
Analysts said oil prices were reacting to the rally in the U.S. currency today. In recent weeks a falling dollar drove investors to buy commodities - including oil - as a hedge against inflation. Commodities touched new records highs last week.
Crude oil for delivery in April fell 0.72 cents or 0.67 percent to $107.18 a barrel on the New York Mercantile Exchange at 10:38 a.m. London Brent crude for the same month fell 0.51 cents or 0.48 percent to $104.34 a barrel on the ICE Futures Exchange.
Crude oil prices in New York hit a new record on Tuesday climbing to $109.72 a barrel. Also today, Brent crude futures touched a record $105.82 a barrel.
Supporting oil prices, today the International Energy Agency reduced its forecast for 2008 global oil demand for a second month. In a monthly report the IEA cut its demand estimate by 80,000 barrels a day to 87.54 million barrels a day, totaling a growth of 2 percent of annual demand.