Oil prices surged Wednesday after the US Federal Reserve kept its massive monetary stimulus program, dashing expectations that it would begin scaling it back.
New York’s main contract, West Texas Intermediate for October, jumped $2.65 to close at $108.07 a barrel.
Brent North Sea crude for delivery in November climbed $2.41 to finish at $110.60 a barrel in London trade.
A decline in US crude oil supplies last week also helped fuel the rally, as the drop suggested stronger demand in the world’s biggest economy.
“October crude oil advanced for the first time in four sessions, gaining support from strong inventory data and the Federal Reserve decision to maintain its current monetary stimulus,” Briefing.com analysts said in a markets note.
Oil prices pushed higher after the Federal Reserve surprised markets by keeping its $85 billion a month asset-purchase program unchanged.
Analysts had widely expected the policy-setting Federal Open Market Committee to announce its first reductions to the program at the conclusion Wednesday of its two-day meeting, a move that might have confirmed views that the economy was picking up strength.
The FOMC said, in a post-meeting statement, that although the economy appears to be holding up amid government “sequester” spending cuts, it “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
The dollar weakened sharply on the news, making dollar-priced oil more attractive for buyers using stronger currencies.
Traders also reacted to the bullish weekly snapshot of energy inventories in the United States.
The US Department of Energy said US crude inventories tumbled 4.4 million barrels last week. Analysts’ consensus forecast had been for a much smaller drop of 1.2 million barrels.
Source: AFP
