Oil Rises on Fed’s Optimistic Outlook

West Texas Intermediate crude rose for a second day after the Federal Reserve said it will reduce stimulus as the nation’s economic outlook improves and as U.S. fuel consumption increased.

Prices gained as much as 0.9 percent. The Fed is trimming its monthly bond purchases, “reflecting cumulative progress and an improved outlook for the job market,” Chairman Ben S. Bernanke said at a press conference yesterday. Total U.S. petroleum demand increased last week to the most since 2008, according to the Energy Information Administration.

“The Fed signaled that the economy is in a better shape than people had thought, and that’s bullish for crude oil,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Stronger demand is suggesting that consumers are actually spending.”

WTI for January delivery, which expires today, rose 86 cents, or 0.9 percent, to $98.66 a barrel at 11:37 a.m. on the New York Mercantile Exchange. The more-active February contract gained 85 cents to $98.91. The volume of all futures traded was 35 percent below the 100-day average.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza