Oil traded at a 31-month high in New York as the Federal Reserve's renewed pledge to stimulate growth boosted speculation that fuel demand will increase.
Crude futures climbed as much as 0.8 per cent after Federal Reserve Chairman Ben Bernanke signalled on Wednesday that the US will keep its record monetary stimulus in place. US petrol stockpiles fell to the lowest level since August 2009, the Energy Department said yesterday. The Dollar Index, which tracks the US currency against six trading partners, fell to the lowest level since 2008, boosting the appeal of commodities priced in the US currency. "Potential further dollar weakness and the approaching driving season is making it hard to argue for profit taking at the moment," Filip Petersson, commodity strategist at Stockholm-based SEB AB, said in a note. The driving season in the US begins on Memorial Day, the last weekend of May.
Crude oil for June delivery gained as much as 94 cents to $113.70 a barrel in electronic trading on the New York Mercantile Exchange, the highest price since September 22, 2008. The contract was at $113.16 at 9.54am London time. Brent oil for June settlement was at $125.71 a barrel, up 0.5 per cent, on London's ICE Futures Europe exchange.
Futures in New York are poised for an eighth monthly gain, buoyed by concern that political unrest in the Middle East and North Africa could spread to other producers including Saudi Arabia. Unrest in the region has toppled leaders in Egypt and Tunisia and spread to Libya, Algeria, Bahrain, Iran, Oman, Syria and Yemen.
The US economy probably grew at a slower pace in the first quarter as higher petrol prices prompted American consumers to curb spending, economists said ahead of a government report yesterday. The US Commerce Department estimate on gross domestic product is due at 8.30am local time. "I don't think the US GDP data will have much of an impact on crude," said Alexander Ridgers, head of commodities of CMC Markets in London. "Good data will suggest a strong demand for crude; bad data will guarantee rates remain low for longer and keep prices high."
North Sea Brent crude's premium to US benchmark West Texas Intermediate widened for a third day.
US stockpiles of petrol dropped for a 10th week in the seven days to April 22, the longest losing streak in four years, according to US Department of Energy data. Stockpiles of gasoline fell 2.51 million barrels to 205.6 million that week, according to Department of Energy data on Bloomberg.