A strong greenback makes dollar-priced crude more costly to holders of other currencies, softening demand and resulting in lower prices.
New York's main contract, West Texas Advanced for November delivery, was down $1. 21 at $84. 71 the barrel in morning Asian trade, and Brent North Ocean crude for November dropped $1. 26 to 109. 10.
The united states Federal Reserve, after a two-day meeting Wednesday, unveiled a $400 billion stimulus plan reduce long-term interest rates but investors chose to pay attention to its warning about the outlook for the world's greatest economy and oil consumer.
In announcing the new steps, the Fed painted a grim picture of the economic climate, strapped with slow growth, high unemployment and a depressed housing industry.
"There are significant downside risks to the economic perspective, including strains in global financial markets, " the central bank's Federal Open Market Committee warned inside a statement.
The Fed stimulus plan did little to buoy the actual markets, as US stocks dived and the dollar surged -- a sign investors were once again flocking to the currency regarded as a safe bet in times of crisis.
Chen Xin Yi, the commodities analyst at Barclays Capital in Singapore, said the Fed's statement about significant downside risks "contributed to some risk aversion" on the market.
Source : Business - Standard