Oil market pauses as traders digest Yellen comments

11th February 2014, Comments 0 comments

World oil prices paused on Tuesday after new Federal Reserve boss Janet Yellen signalled that the US central bank had no plans to change monetary policy.

Brent North Sea crude for delivery in March firmed 23 cents to stand at $108.86 a barrel in late afternoon deals.

New York's main contract, West Texas Intermediate (WTI) for March, eased 12 cents to $99.94 per barrel.

"The reaction of oil prices to Yellen's remarks was fairly muted," said Forex.com markets analyst Fawad Razaqzada.

"This should not have come as a surprise however, because crude oil has not behaved quite rationally in recent times," he told AFP.

"On Friday, for example, both the Brent and WTI contracts rallied sharply despite that non-farm payrolls miss."

Sticking to the Fed's playbook of the past year, Yellen, who took the helm of the US central bank at the beginning of this month, stressed that unemployment continues to be a problem and held the focus of Fed policy makers.

In her first public comments on policy as chair, Yellen said that with the economy expected to grow this year and next at a moderate pace, the Fed would continue to slowly reel in its huge stimulus.

But she stressed that was also contingent on the labour market, where recovery remains "far from complete."

And she allowed that the Federal Open Market Committee, the Fed's policy-making body, could weigh when it meets in March a pause to the taper of the current $65 billion a month bond-buying program if economic conditions showed a significant deterioration.

"I expect a great deal of continuity in the FOMC's approach to monetary policy," she told the Financial Services Committee of the US House of Representatives.

The health of the US economy is a key influence on oil prices, with the United States being the world's biggest consumer of crude.

New York crude finished above $100 a barrel for the first time this year on Monday, buoyed also by cold weather in the US, analysts said.

"While cold weather in the US continues to support crude oil prices today's comments from Janet Yellen have done nothing to alter the overall (upwards) direction seen over the last few days," added Michael Hewson at traders CMC Markets UK.

The oil market had rallied sharply last Friday, gaining more than $2, as traders shrugged off disappointing US non-farm payrolls data.

The US economy added only 113,000 jobs in January, after a paltry 75,000 in December, the Labor Department had said. That was well below expectations for a gain of 175,000.

© 2014 AFP

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