NEW YORK (AP) -- The price of oil was lower Wednesday as traders awaited information on the U.S. Federal Reserve's plans for its bond-buying program.
Oil held onto losses in morning trading even as the Energy Department reported declines in oil and gas supplies in its weekly inventory report.
Benchmark oil for October delivery was down 56 cents to $104.55 a barrel on the New York Mercantile Exchange.
The government reported that crude oil supplies fell by 1.4 million barrels and gasoline stocks dropped by 4 million barrels in the week ended Aug. 16. Both declines were larger than analysts. Gasoline futures rose 3 cents to $2.95 a barrel.
Still, the key focus of attention in the markets is the pending release of the minutes from the Fed's last policy meeting. Traders will be looking out for any hints about when the central bank might begin cutting back on its $85 billion a month of asset purchases. Growing evidence that the U.S. economy is improving and a raft of comments from Fed officials have convinced many in the markets that the so-called tapering of the stimulus will start this year, possibly as soon as September.
The Fed's stimulus policy has lowered interest rates and made oil and other commodities a more attractive investment by offering potentially higher returns. Many analysts think the tapering could weigh on oil prices.
Brent crude, which is used to set prices for imported oil used by many U.S. refineries, was down 3 cents to $110.11 a barrel on the ICE Futures exchange in London.
The crisis in Egypt has prevented prices from falling too much. Egypt controls the Suez Canal, which is a key transport route for oil and other goods in the Middle East. While analysts expect the channel to remain open, a risk premium and higher insurance costs are seen being added to the oil price.
Reports of labor conflicts at key Libyan ports used to export oil have also supported oil prices.
In other energy futures trading on Nymex:
— Heating oil was flat at $3.08 per gallon.
— Natural gas rose 3 cents to $3.47 per 1,000 cubic feet.
Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this report.