Oil edges lower ahead of Fed meeting

By DIRK LAMMERS AP Energy Writer

(AP) - Oil prices edged lower Tuesday as a stronger dollar cooled the money flow into energy markets that has propped up crude prices for months.

Since oil is largely bought and sold in dollars, investors holding stronger currencies can buy more crude for less.

The Federal Reserve begins a two-day policy meeting on interest rates on Tuesday where it will discuss whether it is too soon to tighten U.S. monetary policy.

"Oil is still being controlled by larger macroeconomic forces and not just demand and demand expectations," said PFGBest analyst Phil Flynn. "The main concern is still all about what the Federal Reserve might do."

Crude has been plentiful because the global economic slowdown has crmped demand, particularly in the United States.

Most analysts believe crude supplies in the U.S. grew again last week and on Wednesday, the Energy Department will release its weekly supply and demand figures for oil and gasoline.

Benchmark crude for December delivery fell 4 cents to $78.09 a barrel Tuesday on the New York Mercantile Exchange.

The average price for a gallon of regular gasoline fell a half penny to $2.686, according to auto club AAA, Wright Express and Oil Price Information Service. That's 22.5 cents more than a month ago, and 27.1 cents more than gas cost at this time last year.

In other Nymex trading, heating oil fell less than a penny to $2.0412 a gallon. Gasoline for December delivery fell about a cent to $1.9811 a gallon. Natural gas for December delivery gained 3.7 cents to $4.861 per 1,000 cubic feet.

In London, Brent crude for December delivery was flat at $76.55 on the ICE Futures exchange.

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Associated Press Writers Alex Kennedy in Singapore and contributed to this report.