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Markets

Crude rises in Asia in tandem with Asian equities

SINGAPORE : Crude futures soared in Asian trade Wednesday, mirroring Asian equities markets encouraged by the US Federal
10 Aug 2011

oilSINGAPORE: Crude futures soared in Asian trade Wednesday, mirroring Asian equities markets encouraged by the US Federal Reserve's two-year commitment to keep interest rates low, analysts said.

New York's main contract, light sweet crude for delivery in September, gained $1.72 to $81.02 per barrel.

Brent North Sea crude for September delivery added $1.84 to $104.41.

A rally by Asian equities markets early Wednesday hours after the US Federal Reserve pledged to hold interest rates at near zero for two more years was spurring crude prices, said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

"The indication about keeping interest rates low for two more years helped the relief rally that we are seeing in equities and that has also caused buying in oil futures," he told AFP.

The Fed on Tuesday said it would maintain its key interest rate at the ultra-low level of 0-0.25 percent -- in place since December 2008 -- and vowed to keep "exceptionally low" rates "at least through mid-2013."

The move was to prevent the US economy from stalling as worries grew of a new recession in the world's largest oil consumer, with the Fed saying it expected growth had been "considerably slower" than expected so far this year.

Growth was also expected to be at a "somewhat slower pace" over the coming quarters, the Fed's Open Market Committee added, as "downside risks to the economic outlook have increased."

The Fed's interest rate commitment cheered markets, which had been spooked by rating agency Standard & Poor's downgrade of US credit last week, resulting in a slump in global equities markets as well as crude oil prices.

 

Copyright AFP (Agence France-Presse), 2011