Oil Closes Up at $92.33 after Fed Rate Cut
Oil closed above $92 per barrel Wednesday, after the U.S. Federal Reserve cut interest rates to stimulate the economy of the world's top energy consumer.
U.S. light, sweet crude settled up 69 cents at $92.33 per barrel on the Nymex, rising on the Fed decision to reduce interest rates by a half-percentage point as part of aggressive efforts to halt the U.S. economic slowdown.
London Brent rose 53 cents to $92.53 per barrel.
"I think the market had been discounting a cut of 50 points for the last couple of sessions," said Jim Ritterbusch, president of Ritterbusch & Associates.
"By and large, most of it had been discounted, but the wording within the report appears supportive to the equity markets and that is just spilling over into the petroleum market at the present time," he added.
The Fed decision came after government data reported U.S. gross domestic product grew at just 2.2 percent in 2007, the lowest growth rate since 2002.
Further support for crude came from expectations OPEC will keep production levels stable when it meets this week, despite concerns high oil prices are adding to the recessionary pressures of the subprime and credit crisis.
U.S. Energy Secretary Sam Bodman Tuesday reiterated calls for OPEC to raise production to help lower prices after oil hit a record $100.09 a barrel Jan. 3, before worries demand could be hit by a U.S. recession dragged prices lower.
But OPEC members, gathering in Vienna ahead of the Feb. 1 policy meeting, have offered no signs they will answer calls from consumer nations and ramp up output.
"I am not sure we need to increase," said OPEC President Chakib Khelil.
Saudi Arabian Oil Minister Ali al-Naimi said Wednesday oil market supply and demand fundamentals were in good shape.
"They are sound," Naimi said when asked his view on market fundamentals.
Prices fell briefly earlier Wednesday after a U.S. government report showed a 3.6-million-barrel build in crude inventories as refiners cut back on runs.
The U.S. Energy Information Administration report showed gasoline stocks up by 3.6 million barrels last week. Analysts said the build came as high energy costs and economic problems caused consumers to scale back on driving.