WSJ:Crude Rises in Asia after Fed Stimulus Decision
Crude-oil futures rose in Asian trade Friday, in line with strong gains in global equity markets, after the U.S. Federal Reserve announced new monetary stimulus. Rising tensions in the Middle East also supported oil prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $99.56 a barrel at 0619 GMT, up $1.25 in the Globex electronic session. November Brent crude on London's ICE Futures exchange rose $1.04 to $116.92 a barrel.
The Fed said Thursday that it will purchase $40 billion of mortgage-backed securities each month until the U.S. job market improves, and will keep short-term interest rates near zero until at least mid-2015.
The Fed's stance is bullish for riskier assets such as oil that will likely track gains in equities and move inversely to a weaker U.S. dollar, energy consulting firm Ritterbusch and Associates said in a note.
The fact that the Fed's announcement corresponded with a breakout from four-week trading ranges for benchmark oil futures reinforces a bullish view, it said.
The upside targets are $119.50 a barrel for ICE Brent and $99.75 a barrel for Nymex West Texas Intermediate, the firm said.
However, it cautioned that governments might release strategic oil reserves due to rising prices, which would be bearish for oil prices.
Traders were pricing in a risk premium due to turmoil in the Middle East, which is supporting oil prices, The Schork Group said in a note.
"Put frankly, we expect traders will not want to hold short contracts going into a volatile weekend...," it said.
Anti-American protests in Egypt, Yemen, Iraq and Iran threatened to escalate, just days after armed attackers killed the ambassador and three other Americans at the U.S. Consulate in Libya. The protests were sparked by an anti-Islamic video that was produced in the U.S.
In addition, the International Atomic Energy Agency's board has approved a resolution condemning Iran for continuing to defy U.N. Security Council resolutions and conducting uranium enrichment.
Separately, refinery restarts such as Philadelphia Energy restarting the fluid catalytic cracker at its 330,000 barrel-a-day refinery, should encourage higher crude consumption, the Schork Group said.
Nymex reformulated gasoline blendstock for October--the benchmark gasoline contract--rose 306 points to $2.9928 a gallon, while October heating oil traded at $3.2363, 250 points higher.
ICE gasoil for October changed hands at $1010.00 a metric ton, up $5.50 from Thursday's settlement.
