Oil keeps climbing after Fed passes on tapering
Published Sep 18, 2013 09:10PM ET
Investing.com - Oil futures continued higher during Thursday’s Asian session after the Federal Reserve shocked markets by saying it will not taper its quantitative easing program.
On the New York Mercantile Exchange, light, sweet crude futures for November delivery jumped 0.41% to USD107.72 per barrel in Asian trading Thursday. The November contract settled higher by 2.35% at USD107.28 per barrel on Wednesday.
Many investors felt the Fed would announce plans to trim the amount of bonds it buys each month to spur recovery, a stimulus tool known as quantitative easing that drives down long-term interest rates and weakens the dollar to spur recovery, a recipe for rising gold prices. However, the Fed surprised markets by saying tapering of its easing efforts is tied to economic data and not the calendar.
While that could be viewed as a sign that the U.S. economy is not as deep into recovery as the Fed would like to see, data points suggest oil demand is picking up.
The Energy Information Administration reported earlier that U.S. crude oil stockpiles dropped by 4.37 million barrels in the week ending Sept. 13, well beyond expectations for a decline of 1.39 million barrels and far past a decline of 219,000 barrels in the previous week.
In U.S. economic news out Wednesday, the Commerce Department said single-family housing starts jumped 7% last month to an annual rate of 628,000 units, the highest level in six months. New construction for apartments and condominiums fell 11.1%. Permits for single-family homes rose 3% to the highest level since May 2008.
Oil futures could continue to rise on the expectation that with QE remaining in place for the foreseeable future, the U.S. dollar will weaken. Oil is denominated in dollars.
Elsewhere, Brent futures for November delivery rose 0.26% to USD110.86 per barrel on the ICE Futures Exchange.
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Written By: Investing.com
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