Oil prices higher as US maintains low interest rates

SINGAPORE: Oil prices rose in Asia on Thursday on news that the US Federal Reserve would keep interest rates low for at least two years to boost growth in the world's leading economy, analysts said.

New York's main contract, West Texas Intermediate crude for delivery in March, gained 70 cents to $100.10 a barrel in the afternoon.

Brent North Sea crude for March delivery was up 85 cents to $110.66.

"Crude oil futures rose as investors cheered a plan by the US Federal Reserve to keep interest rates low at least through late 2014," Phillip Futures said in a commentary.

The US central bank's policy-setting Federal Open Market Committee on Wednesday announced it would keep its "highly accommodative" monetary policy to support the fragile economic recovery.

The FOMC said its key interest rate would remain near zero through at least 2014, extending a prior timeframe of mid-2013.

The bullish Fed news overshadowed lingering worries over a potential Greek debt default and earlier US government data showing weaker energy demand.

International Monetary Fund chief Christine Lagarde on Wednesday said that European public creditors would need to pitch in and help Greece if private banks did not agree to a sufficient cut in money owed to them.

Greece is struggling to clinch a massive write-down deal with private creditors, a major precondition for a second 130 billion euro ($170 billion) rescue package from its euro-zone partners.

Greek finance ministry sources said officials had given themselves until February 13 to clinch a deal with lenders. The IMF had earlier warned that Europe's debt crisis could tip the world economy into recession and a bigger firewall was urgently needed to keep the damage from spreading.

"The gloomy euro-zone outlook (is) further reinforced by the IMF's new warnings with regard to the euro-zone crisis," said Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at Ernst & Young.

Copyright AFP (Agence France-Presse), 2012