Oil prices hit six-month highs

3rd November 2010, Comments 0 comments

World oil prices soared to six-month high points on Wednesday on mounting expectations of a new Federal Reserve stimulus plan to revive the US economy, analysts said.

Brent North Sea crude for delivery in December delivery rallied as high as 86.63 dollars, reaching a level last seen on May 4. It later stood at 86.22, up 81 cents from Tuesday's close.

New York's main contract, light sweet crude for December, surged to a similar pinnacle at 85.04 dollars, before pulling back to 84.68, up 78 cents.

Later on Wednesday, the US central bank's Federal Open Market Committee will reveal the outcome of its latest monetary policy meeting.

The eagerly-awaited announcement was expected to unveil a second round of bond-purchasing or quantitative easing (QE) to bolster American economic recovery.

Ahead of the Fed decision, the US government's Department of Energy will publish its weekly snapshot of crude oil inventories, detailing its stockpiles for the week ending October 29.

Oil had shot higher on Tuesday as Federal Reserve policymakers began their two-day meeting in Washington.

"The US Federal Reserve is expected to announce an initial 500 billion dollars of bond purchases (quantitative easing) tonight, although (the) ultimate size and timing remains uncertain," analysts from the Commonwealth Bank of Australia said in a commentary.

They said the widely-expected new round of stimulus measures "would boost crude demand in the world's largest oil consuming economy".

Crude prices have also been boosted by the weak dollar, which has been under pressure because another round of QE is expected to dilute the value of the US unit. A weaker greenback tends to boost demand for dollar-priced oil.


© 2010 AFP

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