Crude Oil Rises Above $80 on Bernanke’s Low Interest Rate Pledge
Crude oil futures gained more than $1 on Wednesday after U.S. Federal Reserve Chairman Ben Bernanke reiterated his commitment to keeping interest rates low in order to encourage lending and growth which would fuel an economic recovery.
Short-term interest rates would remain exceptionally low for “an extended period,” Bernanke said.
The rise in crude oil prices took place despite a larger-than-expected gain in crude inventories reported by the Energy Information Administration today in its weekly report.
U.S. light, sweet crude for April delivery traded up $1.14 to settle at $80.01 a barrel at the close of floor trading on the New York Mercantile Exchange.
“Increases in energy prices resulted in a pickup in consumer price inflation in the second half of last year,” Bernanke also noted, “but oil prices have flattened out over recent months, and most indicators suggest that inflation likely will be subdued for some time.”
Crude oil supplies gained 3.03 million barrels last week to 337.5 million, the highest level it’s been at since November of last year.
“Right now, because of the recession, there is excess capacity” of crude oil, said U.S. Energy Secretary Steven Chu.
Fuel consumption in the U.S. was up 1.3 percent from a year earlier to 19.1 million barrels a day in the four weeks ended Feb. 19, according to the Energy Department report. Gasoline demand fell 0.3 percent to 8.7 million barrels a day.