Crude oil futures rose in choppy trading on Wednesday as investors cheered the US Federal Reserve's intention to keep interest rates low at least through late 2014. The Fed, in a statement following a two-day policy meeting, said that, while the economy was expanding moderately despite slowing global growth, the US unemployment rate was still elevated and that the economy faces "significant downside risks."
"While we did not get an indication of an implementation of a third round of quantitative easing, the Fed is clearly continuing in an activist mode with the extension of the 'exceptionally low' interest period," said John Kilduff, partner at Again Capital LLC in New York.
"This bodes well for a lower dollar and higher commodity prices (as) the Fed looks to be willing to continue to stoke inflation as part of its efforts to revive the economy," he added. Before the Fed announcement, crude futures seesawed on mixed US government data showing higher crude inventories and drawdowns in refined product stockpiles. Earlier in the day, prices were down on worries about a potential Greek debt default.
In London, ICE Brent crude for March delivery was up 78 cents at $110.81 a barrel by 1:05 pm EST (1805 GMT), up from a session low of $108.91 hit after pushing below its 50-day moving average of $109.32. US crude futures for February delivery were up 90 cents at $99.85 a barrel, after dropping to a session low of $97.53.
US crude oil inventories rose 3.6 million barrels last week, the US Energy Information Administration said. That exceeded the 800,000 barrel build in a Reuters forecast but was far less than the 7.3 million-barrel build reported by industry group American Petroleum Institute on Tuesday.
Distillate stockpiles, which include heating oil and diesel fuel, matched API data by falling 2.5 million barrels against expectations that they were unchanged from the previous week. Gasoline inventories dropped 400,000 barrels, less than the API's report of a 573,00 barrel decline and defying forecasts for an increase of 1.9 million barrels.