Oil prices close lower

NEW YORK - June 25, 2008 Light, sweet crude for August delivery is down $2.59 at $134.41 a barrel on the New York Mercantile Exchange. Earlier, prices fell as much as $5 on the government's report that oil inventories rose unexpectedly last week.

Analysts believe there was little in the Fed's announcement that surprised the market, which had expected the central bank to hold rates steady. Some investors may have been hoping for a rate increase.

Interest rate cuts tend to weaken the dollar. The Fed's campaign of rate cuts has sent the greenback into a protracted decline against the euro. Many analysts believe this decline is a big part of the reason oil prices have nearly doubled over the past year.

(Copyright 2008 by The Associated Press. All Rights Reserved.) AP-NY-06-25-08 1443EDT