Thursday March 19, 12:49 PM
Oil price breaches $50 on Fed plan
LONDON (AFP) - Oil prices hit four-month highs above 50 dollars on Thursday after the US Federal Reserve's latest bid to lift the world's biggest energy consuming nation out of recession, analysts said.
New York's main futures contract, light sweet crude for delivery in April, jumped as high 51.65 dollars a barrel -- the highest level since November 28, 2008.
It later stood at 50.38 dollars, up 2.24 dollars on Wednesday's close.
Brent North Sea crude for May delivery won 2.13 dollars to 49.79 dollars a barrel after also breaching 51 dollars.
"Crude prices continued to rise ... following renewed optimism among market participants amid yesterday's announcement from the US Federal Reserve," said Sucden Financial analyst Nimit Khamar.
Global stock markets mostly advanced Thursday as traders tracked overnight gains on Wall Street after a surprise decision by the US Federal Reserve to pump 1.15 trillion dollars into the financial system.
Crude futures had slid Wednesday on news of a larger-than-expected increase in US energy (USEG - news) reserves that highlighted weak American energy demand, but trimmed losses after news of the Fed plan.
"Oil prices took a rollercoaster ride yesterday, with bearish (US) inventory data ... firstly prompting a fall in the April (New York) contract to 47 dollars before the Fed's surprising announcement, resulting in prices jumping close to the 50-dollar mark," said Dresdner Kleinwort analyst Eugen Weinberg.
The US central bank said Wednesday that it would buy up to 300 billion dollars in long-term US Treasury bonds over the next six months "to help improve conditions in private credit markets."
The Fed also said it would boost purchases of mortgage-backed securities by 750 billion dollars to bring its total to 1.25 trillion dollars this year, and buy 100 billion dollars more in other federal agency debt, as part of a wide-ranging effort to revive the sagging US economy.
But the market was pulled lower on Wednesday after a weekly US government energy report showed the country's crude oil stocks grew by two million barrels in the week ending March 13, double the consensus forecast.
Meanwhile, key oil sector players warned at an OPEC-organised conference in Vienna on Wednesday that weak oil prices are squeezing critical industry investment.
This threatens to drive up the cost of energy when the global economy recovers, they said.
"Current prices threaten the very sustainability of planned industry-wide investments," OPEC secretary general Abdalla Salem El-Badri said.
"We have all heard of project cutbacks, delays and cancellations. It is putting future crude supply at risk."
The Organization of the Petroleum Exporting Countries (OPEC), which pumps about 40 percent of the world's crude, opted at its last meeting on Sunday in Vienna to leave production quotas unchanged.
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