Crude Oil Rises; Closes at 3 month High, Up 16% on the Year
Crude oil rose above $51 a barrel and closed at a three-month high in response to the U.S. Federal Reserve announcement that they plan to spend $1 trillion buying back debt.
U.S. light, sweet crude rose $3.47, or 7.21 percent, to settle at $51.61 a barrel, having earlier traded as high as $52.25, the highest since Dec. 1, 2008.
It was the highest settlement of the crude oil futures contract since Nov. 28.
Oil is up 16 percent so far this year as record production cuts of 4.2 million barrels per day by the Organization of Petroleum Exporting Countries (OPEC) have started to reduce a supply glut caused by the worst economic crisis since World War II.
Prices are still down 65 percent from July’s record of more than $147 a barrel.
Earlier this week, OPEC deliberated whether to further reduce production but ultimately decided that the global economy was too frail to warrant such a move.
The United States was pleased with the OPEC decision not to cut production again.
“While OPEC’s actions are just one factor among many that go into the market price of oil, I’m pleased that there won’t be further production cuts,” U.S. Energy Secretary Steven Chu announced in a statement.
The U.S. dollar extended a sharp sell-off Thursday, a day after posting its biggest one-day loss against a basket of currencies since at least 1985, which also attributed to the sharp rise in crude oil prices.
the Fed said it was seeking to purchase U.S. Treasuries, mortgage-backed bonds and other debt, which are raising expectations that efforts to end the global recession will boost fuel demand.
The more-active May contract increased $3.14, or 6.4 percent, to end the session at $52.04 a barrel. The April crude oil futures contract expires tomorrow.