Brent nears $116 on likely Fed move
Singapore, August 23, 2012
Brent crude rose more than a dollar on Thursday, approaching $116 per barrel on renewed hopes for another round of monetary stimulus by the US Federal Reserve, helping investors look past weak manufacturing data from China.
The prospect of further economic stimulus from the Fed should boost the outlook for demand from the world's top oil consumer, although more evidence of a slowdown in China, the second biggest user, could limit price gains.
Brent October futures rose 96 to $115.88 a barrel at 0443 GMT, rising for a third straight session. US crude was up 79 cents at $98.05 per barrel, off a three-month high of $98.17 earlier in the session.
"We are in the midst of the US holiday season, when demand for oil is high, and the added impetus is the prospect of stimulus," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
Minutes from the latest meeting of Fed policymakers released on Wednesday suggested that the US central bank is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably.
The Fed's policy has been fairly dovish, given that overnight interest rates are near zero and it has bought $2.3 trillion in US government debt and mortgage-related bonds to push borrowing costs lower. It has said it does not expect to raise rates until late-2014 at the earliest.
Further stimulus may weaken the dollar, which in turn will spur prices of all commodities, while any boost to the US economy from the stimulus may also drive up demand for oil. - Reuters