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Oil rises above $86 ahead of Fed statement Brent crude extends gains as traders expect U.S. Federal Reserve to end bond-buying program and keep interest rates low
Brent crude oil extended gains above $86 a barrel on Wednesday as traders anticipated the end of quantitative easing in the United Stated would squeeze the dollar. The Federal Reserve is widely expected to end its two-year-old bond-buying stimulus programme, and to keep interest rates low, in a statement due at 1800 GMT on Wednesday. "We're likely to see a slightly weaker dollar today, if the Fed is as dovish as expected, and that will support oil prices in the short term," said Michael Hewson, chief analyst at CMC Markets in London. A weaker greenback makes it easier for global consumers to buy dollar-denominated commodities such as oil, boosting demand. Brent crude for December was up 30 cents at $86.33 a barrel by 0930 GMT, after settling up 20 cents on Tuesday. Front-month U.S. crude was up 45 cents at $81.87 a barrel. Prices also gained support from buoyant stock markets in Europe and Asia, after U.S. stocks ended more than 1 percent higher on Tuesday. U.S. consumer confidence rose in October to its highest level since October 2007 as views on the job market improved, according to a private sector report released on Tuesday. "The U.S. consumer confidence data points to a potential increase in demand for oil," said Hewson. U.S. stocks of gasoline and distillate fell by 3.7 million barrels and 3 million barrels respectively, three times more than analysts' expectations, data by industry group American Petroleum Institute (API) showed on Tuesday. U.S. crude inventories rose 3.2 million barrels last week, slightly below analysts' expectation of a 3.4 million barrel increase. Crude inventories have risen for the past three weeks, typical in the approach to winter, when demand increases. U.S. oil refining capacity is forecast to increase this week due to a reduction in planned outages as the maintenance season draws to a close, data from research company IIR showed on Wednesday. Investors awaited data on oil stocks from the U.S. government's Energy Information Administration at 1030 EDT (1430 GMT). Several major banks have cut their price forecasts for Brent and U.S. crude next year in the past two weeks, but weeks of losses have brought the prices into the range of these revised forecasts. http://english.ahram.org.eg/News/114237.aspx
