Crude climbs $1/bbl to new six-month highs on US Fed plans

04 November 2010 09:33  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures rose more than $1/bbl on Thursday to new six-month highs as the US dollar weakened and equity markets soared following an announcement from the US Federal Reserve of new monetary stimulus measures.

At 08:49 GMT, December Brent on London’s ICE futures exchange was trading at $87.44/bbl, up $1.06/bbl. Earlier, the North Sea benchmark hit a new six-month high of $87.59/bbl.

December NYMEX light-sweet crude futures were trading at $85.87/bbl, up $1.18/bbl. Earlier, the US benchmark climbed to $86.05/bbl its highest level since early May this year.

Crude rose after the US Federal Reserve revealed plans to pump some $600bn into the US economy by June 2011 via the purchase of some $75bn per month of Treasury bonds as part of its second round of quantitative easing.

The move is an attempt to boost the flagging US economy and reduce high levels of unemployment.

The Fed’s action served to drive down the US dollar against other leading currencies, which made dollar-denominated commodities such as crude more attractive to investors.

Equity markets were buoyed by the Fed news, with the Nikkei 225 Index in Japan gaining some 2.17% on Thursday.

Crude prices were also supported by larger-than-expected falls in US distillate and gasoline inventories of some 3.6m bbl and 2.7m bbl, respectively, as revealed in weekly data from the Energy Information Administration (EIA).

However, this was tempered by a larger-than-expected rise in crude stocks of some 2m bbl.

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By: James Dennis
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