Nymex oil futures tumbled more than 6% to their lowest level in over a month in heavy early trading Thursday morning, in tandem with a steep selloff in other commodity markets and equities.
Light, sweet crude for November delivery fell $5.42, or 6.3%, to $80.50 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe exchange dropped $4.63, or 4.2%, to $105.73 a barrel. The Dow Jones Industrial Average was down 320 points minutes after the market opened.
Analysts said oil's fall was driven by traders abandoning all forms of risk trades on the back of the Fed's latest quantitative easing strategy and its pessimism over U.S. economic prospects.
"We're clearly seeing the market down in sympathy with the global equity markets," said Andy Lebow, a trader and broker with MF Global. "Clearly the market is anxious about global demand going forward, given some of the clouds over the economy."
In a research note, analyst Matt Smith of Summit Energy said the markets were taking the Fed's move like a "slap in the face.
"As the announcement has been digested overnight, there is little short of a bloodbath underway in the crude market today," he said. "Poor weekly jobless claims -- just out -- are doing nothing to help matters."
Front-month October reformulated gasoline blendstock, or RBOB, dropped 11.23 cents, or 4.2%, to $2.5542. October heating oil fell 10.70 cents, or 3.7%, to $2.8272 a gallon.