Oil price rises on Fed stimulus hopes
Benchmark crude for January delivery was up 31 cents to $86.10 per barrel at late afternoon Bangkok time on the New York Mercantile Exchange.
By PAMELA SAMPSON
The Associated Press
BANGKOK — The price of oil rose Wednesday as investors anticipated that new measures to perk up the U.S. economy will be announced at the end of the Federal Reserve's policy meeting.
Benchmark crude for January delivery was up 31 cents to $86.10 per barrel at late afternoon Bangkok time on the New York Mercantile Exchange. The contract rose 23 cents to finish at $85.79 per barrel in New York on Tuesday. It was the first time crude closed higher after falling for five straight sessions.
There's a widespread expectation that the Fed will Wednesday announce more bond-buying. The Fed has been selling $45 billion a month in short-term Treasurys and using the proceeds to buy an equal amount of longer-term securities. The intent is to lower long-term borrowing rates and encourage spending.
"If that happens, that will mean the U.S. dollar will get weaker and that generally supports the buying of oil futures," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. That's because a weaker dollar makes commodities like oil less expensive for investors holding other currencies.
Oil also got a boost from a survey that indicated German investors believe Europe's largest economy may avoid slipping into recession, although growth is expected to remain tepid.
Brent crude, used to price international varieties of oil, rose 57 cents to $108.58 per barrel in London.
In other energy futures trading on Nymex:
— Heating oil rose 1.7 cents to $2.944 per gallon.
— Wholesale gasoline rose 2.3 cents to $2.634 per gallon.
— Natural gas was steady at $3.412 per 1,000 cubic feet.